AWEUNIVERS/a 


^lOSANCElfx> 
o 


^J5133NVS0#    %Xa3AIN[)-3WV^  %0J!1V3J0^ 


,^\^EUNIVER% 
§  -  J- 

CO 


s   i,„i^i^ 

DO 


^OFCAUFO/?^ 

Off 


^<?Aava8n-# 


.^WEL'NIVERS/A 


%a3AINI13V 


^IvMEHNIVERS/^  ^lOSAHCElfj^ 

-  .......        ^  ^  Jl**3»  I  -< 

<rjliONV-S01'^  %a3AINfl-3ftV* 


«AWEt)NIVER% 

1^1 


^HlBRARYa<: 


^HIBRARY( 

^    £3  -  -  ^ 


^OFCALIF0%  ^OFCMIFOJ 

^-    \  i 

>    V  / /  g  > 


^C/Ad.VJ|lili'iV^'         "Jili'JNnUl-^^  ^/^miNliiW^ 


Digitized  by  the  Internet  Archive 
in  2015 


https://archive.org/details/mercantilesystemOOgust 


ECONOMIC  CLASSICS 

EDITED  BY       J.  ASHLEY 


GUSTAV  SCHMOLLER 


ECONOMIC  CLASSICS 


Volumes  now  ready  : 

1664.    THOMAS  MUN: 

England's  Treasure  by 
Forraign  Trade 

1770.  TURCOT: 

Reflections  on  the  Formation 
and  Distribution  of  Riches 

1776.    ADAM  SMITH : 

Select  Chapters  and  Passages 
from  the  Wealth  of  Nations 

1798.    MALTHUS : 

Parallel  Chapters  from  the 
1st  and  2d  Editions  of  the 
Essay  on  Population 

1817.    RICARDO : 

First  Six  Chapters  of  the 
Principles  of  Political  Economy 

1831.    RICHARD  JONES: 
Peasant  Rents 

1838.    AUGUSTIN  COURNOT: 

Mathematical  Principles  of 
the  Theory  of  Wealth 

1884.    GUSTAV  SCHMOLLER: 
Mercantile  System 


THE  MERCANTILE  SYSTEM 


AND  ITS   HISTORICAL  SIGNIFICANCE 

ILLUSTRATED  CHIEFLY  FROM  PRUSSIAN  HISTORY 

BEING  A  CHAPTER  FROM  THE 

STUDIEN  UEBER  DIE  WIRTHSCHAFTLICHE  POLITIK 
FRIEDRICHS  DES  GROSSEN 


GUSTAV  SCHMOLLER 
1884 


THE  MACMILLAN  COMPANY 

LONDON :  MACMILLAN  &  CO.,  Ltd. 
1902 

\  -/       'A /J  y'io;hts  reserved 


Copyright,  1895, 
By  MACMILLAN  AND  CO. 


Set  up  and  electrotyped  January,  1896.  Reprinted  February, 
1897  ;  April,  1902. 


Norfajooli  IPress 

J.  S.  Gushing  &  Co.  —  Berwick  &  Smith 
Norwood  Mass.  U.S.A. 


5 


GUSTAV  SCHMOLLER  was  bom  at  Heilbronn  in  Wiirtemberg 
L  June  24,  1838.    After  studying  at  the  University  of 
=^<ibingen,  he  became  in  1864  extraordinary,  and  in  1865 
ordinary,  Professor  of  the  Political  Sciences  {Staatswissen- 
schaften)  at  the  University  of  Halle.    In  1872  he  was 
appointed  Professor  at  the  reorganised  University  of  Strass- 
burg  and  in  1882  was  summoned  to  succeed  Adolf  Held  at 
the  University  of  Berlin.  In  1887  he  was  elected  a  Member 
iof  the  Prussian  Academy  of  Sciences,  and  also  appomted 
^Historiographer  for  Brandenburg. 

=  Piofessor  Schmoller  was  one  of  the  leading  promoters  of 
the  Eisenach  Congress  "for  the  discussion  of  the  Social 
Question  "  {Zur  Besprechung  der  sozialen  Frage),  and  de- 
livered the  opening  address  at  its  first  meeting  on  Oct.  6, 
187:  :  he  took  part  in  the  foundation  on  that  occasion  of 
the  Association  for  Social  Politics  {Verein  fur  Sozialpol- 
iHk),  and  has  exercised  great  influence  over  its  subsequent 
acticvn.  Since  1878  he  has  edited  a  substantial  series  of 
Investigations  in  Political  and  Social  Science  {Staats-  und 
Sozialwissenschaftiiche  Forschungen),  largely  the  work  of 
his  pupils;  and  from  1881  onward  he  has  conducted  the 
Jahrbuch  fur  Gesetzgebung,  Verwaltiing  und  Volkswirthschaft 
im  aeutschen  Reiche. 


1 


vi 

His  most  important  writings  hitherto  have  been  the  fol- 
lowing :  Contributions  to  the  History  of  Economic  Opinions 
in  Germany  during  the  Reformation  {Zur  Geschichte  der 
nationaldkonomischen  Ansichten  in  Deutschland  wdhrend 
der  Reformationsperiode,  in  the  Tubingen  Zeitschrift  fur 
Staatswiss ens c haft  i860,  and  separately  Tubingen,  1861)  ;; 
Contributions  to  the  History  of  the  Small  Industries  of  Ger- 
many in  the  igth  Century  {Zur  Geschichte  der  deutschen 
Kleingewerbe  im  ig,  Jahrhundert,  Halle,  1870)  ;  Oft  cer- 
tain Fundamental  Questions  of  Law  and  Economy :  An 
Open  Letter  to  Professor  Treitschke  (  Ueber  einige  Grundfra- 
gen  des  Rechts  und  der  Volkswirthschaft :  Ein  offenes  Send- 
schriben  an  Herrn  Professor  Dr.  Heinrich  von  Treitschke, 
Jena,  1875)  ;  The  Strassburg  Gild  of  Drapers  and  Weav- 
ers {Die  Strassburger  Tucher-  und  Weberzunft,  Strass- 
burg, 1879)  ;  Studies  in  the  Economic  Policy  of  Frederick  the 
Great  (Studien  uber  die  wirthschaftliche  Politik  Friedrichs 
des  Grossen,  in  his  Jahrbuch  1884,  1886,  1887,  and  sepa- 
rately) ;  Contributions  to  the  Literary  History  of  the  Political 
and  Social  Sciences  {Zur  Litteraturgeschichte  der  Staats-  und 
Sozialwis sens chaf ten,  Leipzig,  1888)  ;  Speeches  and  Essays 
on  Modern  Questions  of  Social  and  Industrial  Policy  {Zur 
Sozial-  und  Gewerbepolitik  der  Gegenwart:  Reden  und 
Aufsdtze,  Leipzig,  1890)  ;  The  Historical  Evolution  of 
Business  Undertaking  {Die  geschichtliche  Enttvickelung  der 
Unte?'nehmung,  in  his  Jahrbuch  for  1890  and  subsequent 
years)  ;  and  an  article  on  Economic  Doctrine  and  Method 
( Volkswirthschaft,  Volkswirthsc hafts lehre  und  -methode, 
contributed  in  1893  to  Conrad's  Handwdrterbuch  der 
Staatswissenschaften),     His  scientific  and  literary  acavity 


vii 


has  been  incessant  and  wide-reaching :  a  list  of  his  writings 
down  to  1893  will  be  found  in  the  article  devoted  to  him 
by  Dr.  Lippert  in  Conrad's  Handwdrterbuch,  which  has 
been  freely  drawn  upon  for  the  foregoing  account. 

The  Essay  on  the  Mercantile  System  here  translated,  with 
the  author's  sanction/by  the  editor  of  this  series,  forms  the 
introduction  to  his  Studies  in  the  Economic  Policy  of  Fred- 
erick the  Great:  it  is  dated  Sept.  30,  1883,  and  was  pub- 
lished in  the  first  issue  of  his  Jahrbuch  in  1884.    To  this 
have  been  added  in  Appendix  I.,  as  dealing  with  the  same 
general  theme,  some  pages  from  his  Report  on  the  volumes 
of  Acta  Borussica  which  deal  with  the  Silk  Industry,  read 
before  the  Berlin  Academy  of  Sciences  on  April  21,  1892, 
and  published  in  the  Munich  Allgemeine  Zeitung  for  May 
19  and  23,  1892,  and  afterwards  separately.    The  aim  of  the 
translator  has  been  to  present  the  argument  in  idiomatic 
English ;  and  he  has  not  hesitated  to  occasionally  sacrifice 
shades  of  meaning  which  could  not  be  rendered  without 
making  the  version  inconveniently  cumbrous. 

For  the  convenience  of  readers,  a  list  of  the  territorial 
possessions  of  the  House  of  HohenzoUern  in  the  sixteenth 
and  ,5eventeenth  centuries  has  been  added  in  Appendix  II., 
and  their  geographical  position  has  been  indicated  on  the 
map  at  the  end  of  the  volume.  And  since  the  author's 
illusts-ations  of  his  general  thesis  are  taken  chiefly  from 
German  and  Prussian  history,  a  number  of  notes  have  been 
added  throughout  to  explain  technical  expressions  and  sug- 
gest English  parallels.  The  view  of  the  eighteenth  century 
taketi  by  the  author  should  be  compared  with  that  of  the 
late  Sir  John  Seeley,  in  The  Expansion  of  England. 


viii 

Professor  Schmoller  is  the  leader  of  what  is  known  as 
"  the  younger  Historical  School  of  German  Economists." 
It  has  been  his  endeavour,  as  he  declared  in  1887  on  enter- 
ing the  Berlin  Academy,  to  be  both  an  Economist  and  a 
Historian,  and  the  task  that  has  always  floated  before  his 
eyes  has  been  ^'  to  really  accomplish  what  Hildebrand, 
Knies,  and  Roscher  attempted."  The  Essay  here  pre- 
sented is  a  most  characteristic  piece  of  his  work ;  and  it 
is  an  example  of  a  kind  of  teaching  that  is  exercising  great 
influence  in  Germany  over  the  minds  of  economists,  of 
poHticians,  of  officials,  and  of  the  educated  public.  For 
these  reasons  it  merits  attention,  whatever  judgment  may 
be  arrived  at  concerning  the  validity  of  the  argument. 


r\  M     17  NT  nr  Q 

PAGE 

Mercantile  System  and  its  Historical  Significance  . 

I 

Stages  in  Economic  Evolution  

I 

The  Village  

4 

The  Town                                                            .  . 

6 

The  Territory                                                 .       ^  - 

13 

The  National  State 

47 

Mercantilism   » 

50 

The  Community  of  Nations  

78 

APPENDIX  I. 

The  Prussian  Silk  Industry  in  the  Eighteenth  Century 

APPENDIX  II. 
List  of  the  Princes  and  Territories  of  the  House  of 
Hohenzollern  


Map. 


ix 


THE  MERCANTILE  SYSTEM  AND  ITS 
HISTORICAL  SIGNIFICANCE. 


To  pass  judgment  as  economists  upon  a  whole  historical 
period  necessarily  involves  a  comparison  of  it  with  what 
preceded  and  what  followed;  involves,  that  is  to  say,  our 
understanding  it  as  occupying  a  place  in  some  larger 
movement  of  economic  evolution.  One  naturally  begins, 
therefore,  by  thinking  of  the  various  ways  in  which  men 
have  hitherto  attempted  to  picture  to  themselves  the  devel- 
opment of  the  nations,  and  thereby  to  comprehend  it  in  a 
complete  theory.  They  have  either  fastened  upon  the 
parallel  between  the  life  of  a  people  and  the  life  of  an 
individual;  or  they  have  conceived  of  a  series  of  stages,  in 
which  (i)  pastoral  life,  (2)  agriculture,  (3)  industry,  and 
(4)  trade,  or  (a)  barter,  (^)  the  use  of  currency,  and  (c) 
trade  resting  upon  credit,  have  followed  one  another  in 
orderly  succession.  These  are  conceptions  which  do, 
indeed,  each  take  hold  of  one  portion  of  the  contents  of 
the  process  of  economic  evolution,  and  for  the  compari- 
son with  one  another  of  many  periods  and  communi- 
ties they  are  appropriate  enough;  but  with  regard  to  the 
particular  matter  we  have  now  in  hand,  the  mercantile 
system,  they  give  us  little  help,  and  may  even  lead  us 
astray.    And  it  is  also  clear  that  we  could,  with  equal 


2 


THE  MERCANTILE  SYSTEM 


propriety,  construct  other  formulae,  taken  from  the  historj 
of  the  population,  of  the  settlement  of  the  country,  of  th^ 
division  of  labour,  of  the  formation  of  social  classes,  of  thi 
processes  of  production,  or  of  the  means  of  communica- 
tion; and  that  each  of  these,  so  far  as  it  went,  and  all  of 
them,  —  together  with  those  before  mentioned,  —  would  be 
of  service  for  the  creation  of  a  complete  theory  of  theg 
development  of  mankind.  But  none  of  these  sequences 
of  thought  seems  to  me  anything  likeTo^^  and 
significant  as  that  which  I  shall  venture  to  put  in  the  fore- 
ground, as  a  means  of  setting  the  mercantile  system  in 
its  true  light.  What  I  have  in  mind,  is  the  c^nection  be- 
,tween  economic  life  and  the  essential,  controlling  organ? 
of  social  and  political  life,  —  the  dependence  of  the  main 
ecoSomiFTnWtunonr^H^  upon  the  nature  of 

^  the  political  body  or  bodies  most  impprtant  at  the  time. 

In  every  phase  of  economic  development,  a  guiding  and 
controlling  part  belongs  to  some  one  or  other  political 
organ  of  the  life  of  the  race  or  nation./  At  one  time  it  is 
the  association  of  the  kindred  or  tribe;  at  another  the 
village  or  mark;  now  it  is  the  district,  and  then  the  state 
or  even  a  federation  of  states,  which  plays  this  part. 
It  may  or  may  not  coincide  substantially  with  the  con- 
temporary organisation  of  the  state  or  of  national, 
intellectual,  or  religious  life;  nevertheless  it  rules  eco- 
nomic life  as  well  as  political,  determines  its  structure 
and  institutions,  and  furnishes,  as  it  were,  the  centre  of 
gravity  of  the  whole  mass  of  social-economic  arrange- 
ments. Of  course  it  is  not  the  only  factor  that  enters 
into  the  explanation  of  economic  evolution  ;  but  it  ap- 
pears to  me  the  fullest  in  meaning,  and  the  one  which 


AND  ITS  HISTORICAL  SIGNIFICANCE.  3 


exercises  the  most  penetrating  influence  upon  the  various 
:orms  of  economic  organisation  that  have  made  their  appear- 
mce  in  history.  In  association  with  the  tribe,  the  mark, 
;he  village,  the  town  (or  city),  the  territory,  the  state,  and 
;he  confederation,  certain  definite  economic  organisms 
lave  been  successively  evolved  of  ever  wider  scope :  herein 
ve  have  a  continuous  process  of  development,  which,  though 
t  has  never  accounted  for  all  the  facts  of  economic  life, 
las,  at  every  period,  determined  and  dominated  it.  Within 
;he  village,  the  town,  the  territory,  and  the  state,  the  indi- 
ddual  and  the  family  have  retained  their  independent  and 
jignificant  position;  division  of  labour,  improvement  of  the 
currency,  technical  advance,  have  each  pursued  their  course ; 
the  formation  of  social  classes  has  gone  on  in  particular 
directions;  and  yet  economic  conditions  have,  throughout, 
received  their  peculiar  stamp  from  the  prevalence  at  each 
period  of  a  village  economy,  a  town  economy,  a  territorial 
economy,  or  a  national  economy ;  from  the  splitting-asunder 
of  the  people  into  a  number  of  village-  and  town-economies 
loosely  held  together,  or  from  the  rise  of  territorial  or 
national  bodies  which  have  taken  up  into  themselves  and 
brought  under  their  control  the  earlier  economic  organs. 
Political  organisms  and  economic  organisms  are  by  no 
means  necessarily  conterminous  ;  and  yet  the  great  and 
brilliant  achievements  of  history,  both  political  and  eco- 
nomic, are  wont  to  be  accomplished  at  times  when  economic 
organisation  has  rested  on  the  same  foundations  as  political 
power  and  order. 

The  idea  that  economic  life  has  ever  been  a  process 
mainly  dependent  on  individual  action,— an  idea  based 


4 


THE  MERCANTILE  SYSTEM 


on  the  impression  that  it  is  concerned  merely  with  methods 
of  satisfying  individual  needs, —  is  mistaken  with  regard 
to  all  stages  of  human  civilisation,  and  in  some  respects  it 
is  more  mistaken  the  further  we  go  back. 

The  most  primitive  tribe  of  hunters  or  shepherds  main- 
tains its  existence  only  by  means  of  an  organisation  based| 
on  kinship,  wherein  union  for  purposes  of  defence,  joint' 
journeyings  to  summer  and  winter  pastures,  communistic 
acquisition  for  the  benefit  of  the  whole  tribe,  communistic 
guidance  by  the  tribal  prince,  play  the  most  important 
parts.  The  first  settlement  and  occupation  of  the  soil  is 
never  a  matter  for  individuals,  but  for  tribes  and  clans. 
Then,  while  the  life  of  religion,  of  language,  of  war,  and  of 
politics  remains  common  for  wider  circles,  the  centre  of 
gravity  of  economic  life  passes  to  the  mark  ^  and  the  village. 

1  [What  is  known  as  "  the  mark  theory  "  was  elaborated,  with  special 
regard  to  Germany,  by  Georg  von  Maurer  in  his  Einleitung  zur  Geschichte 
der  Mark-,  Ho/-,  Dorf-  und  Stadtverfassung  (1854)  and  a  series  of  subse- 
quent works,  and  was  accepted,  popularised,  and  generalised  by  Sir  Henry 
Maine  in  his  Village  Comtnunities  in  East  and  West  (1871).  Since  the 
present  essay  was  written  (1883),  the  confidence  of  many  scholars  in  the 
theory  has  been  seriously  shaken  in  various  ways  by  the  works  of  Mr. 
Frederick  Seebohm,  The  English  Village  Community  (1883),  and  M. 
Fustel  de  Coulanges,  Recherches  sur  quelques  Problemes  d'Histoire  (1885), 
and  Origin  of  Property  in  Land  (Eng.  trans,  by  Mrs.  Ashley,  1891).  These 
have  certainly  shewn  the  scantiness  and  uncertainty  of  the  evidence  for  free 
village  communities  owning  m  common  the  land  they  cultivated,  in  the  early 
Middle  Ages.  But  even  if  early  mediaeval  villages  were  usually  "  under  a 
lord  "  or  "  communities  in  serfdom,"  the  character  of  their  economic  life  was 
substantially  that  described  in  the  text.  As  to  the  self-sufficiency  of  the 
manorial  group  see  Ashley,  Economic  History  (1888),  i.  pt.  i,  \  5,  and  Cun- 
ningham, Introduction  to  Walter  of  Henley  (ed.  by  Miss  Lamond,  1890). 
For  a  recent  restatement  of  "  the  characteristics  of  the  ancient  village  com- 
munity," and  its  relation  to  the  city-state  of  the  ancient  world,  see  W.  W. 
Fowler,  The  City-State  of  the  Greeks  and  Romans  (1893).]  jl 


AND  ITS  HISTORICAL  SIGNIFICANCE.  5 


They  become  the  bodies  which  for  centuries  rule  the 
economic  life  of  the  mass  of  the  people.  The  individual 
Ipossesses,  in  the  way  of  house  and  yard,  garden  and  fields, 
jonly  what  the  mark-  or  village-community  concedes  to 
him  and  under  the  conditions  it  allows;  he  uses  the  pasture 
and  the  wood,  the  fisheries,  and  the  hunting-ground  on 
such  terms  as  the  commune  {Gemeinde)  permits  ;  he 
ploughs  and  reaps  as  the  village-community  desires  and 
ordains.^  It  is  hardly  possible  for  him  to  come  into  closer 
intercourse  with  outsiders ;  for  to  remove  any  of  the  prod- 
ucts, whatever  they  may  be,  derived  directly  or  indirectly 
from  the  common  land,  is  forbidden.^  To  take  wood 
from  the  common  forest  can  only  be  allowed  so  long  as 
no  one  exports  wood  or  charcoal  or  tar;  to  turn  out  cattle 
at  pleasure  on  the  common  pasture  can  only  be  recog- 
nised as  a  right  when  every  one  is  feeding  his  own  cattle 
for  his  own  use  and  not  for  strangers.  To  alienate  land 
to  a  non-member  of  the  community  is  forbidden;  and, 
indeed,  as  a  rule,  all  sorts  of  formalities  are  put  in  the 
way  even  of  the  free  yardling  (HufnerY  who  wishes  to 

1  [On  the  nature  and  limitations  of  village  "  communalism  "  in  the  Eng- 
lish Middle  Ages,  see  Pollock  and  Maitland,  History  of  English  Law  (1895), 
i.  614-623.] 

2  Something  of  this  kind  survived  even  in  the  towns.  Thus,  according 
to  a  rule  of  1204,  the  men  of  Liibeck  are  not  passim  et  sine  necessitate  to 
sell  their  ships  and  build  new  ones  at  home,  nor  are  they  to  export  wood 
for  sale,  —  because  of  their  right  to  cut  wood.  Lilb.  Urkundenbuch,  p.  17, 
Urk.  xii. 

3  [The  most  common  equivalent  in  the  English  of  the  later  Middle  Ages 
for  the  German  Hufe  and  Hiifner  were  yardland  and  yardling,  answering 
to  the  Latin  virgata  and  virgarius.  For  the  "  grades  in  the  hierarchy  of 
tenants,"  cf.  W.  Roscher,  Nation aldkonomik  des  Ackerbaues,  §  73  (12th  ed.), 
p.  267,  with  F.  Seebohm,  English  Village  Community,  passim,  and  especially 
p.  29.J 


6  THE  MERCANTILE  SYSTEM 

\ 

leave  the  village.  The  village  is  an  economic  and  com-| 
mercial  system  complete  in  itself,  and  closed  against  the) 
outside  world.  Its  old  constitution  has  to  be  broken  up 
by  the  creation  of  great  states  and  by  other  forces,  before) 
another  and  higher  development  of  economic  life  can  make : 
its  appearance. 

As  the  village,  so  likewise  does  the  town,  —  and  even  more 
^  conspicuously, — grow  into  an  economic  body  (or  organism), 
with  a  peculiar  and  vigorous  life  of  its  own,  dominating 
every  particular.  To  begin  with,  the  choice  of  a  locality, 
the  laying-out  of  the  plan,  the  construction  of  roadways, 
of  bridges,  and  of  walls;  then  the  paving  of  the  streets,  the 
bringing  of  water,  and  the  setting-up  of  lights;  and,  finally, 
the  common  arrangements  which  are  necessary  for  the  mar- 
ket, and  which  lead  to  common  market-houses,  public  scales, 
etc.  — these,  together  with  the  close  juxtaposition  of  resi-; 
dences,  and  the  higher  forms  of  division  of  labour,  ot 
currency,  and  of  credit,  all  create  a  mass  of  uniform, 
common  institutions,  and  bring  about  an  association  of  a 
far  closer  character  than  before.  This  necessarily  makes 
itself  felt  both  inside  and  outside  the  town.  For  centuries 
economic  progress  is  bound  up  with  the  rise  of  the  towns 
and  the  formation  of  civic  institutions.  Each  town,  and 
especially  each  of  the  larger  towns,  seeks  to  shut  itself 
up  to  itself  as  an  economic  whole,  and,  at  the  same 
time,  in  its  relation  to  the  outside  world,  to  extend  the 
sphere  of  its  influence,  both  economic  and  political,  as  far  i 
as  possible.  It  is  not  without  significance,  that,  during  a  ! 
considerable  period  of  ancient  and  of  mediaeval  history, 
all  complete  political  structures  were  city-states,  in  which 


AND  ITS  HISTORICAL  SIGNIFICANCE. 


7 


political  and  economic  life,  local  economic  selfishness 
and  political  patriotism,  political  conflict  and  economic 
rivalry,  all  coincided.  The  economic  policy  of  the  Ger- 
man towns  of  the  Middle  Ages,  and  their  economic  insti- 
tutions, have  played  so  controlling  a  part  in  German  life 
down  to  the  seventeenth  and  eighteenth  centuries,  they 
project  themselves,  so  to  speak,  in  so  many  directions,  into 
our  own  time,  that  we  must  pause  a  moment  to  speak  of 
them  more  at  length. 

Wow 

Not  only  separate  jurisdiction  {Immunifdt),  but  also  the 
right  of  holding  a  market,  of  collecting  tolls,  and  of 
coining  money,  were,  from  early  times,  the  privileges  of 
the  growing  urban  communities.  This  exceptional  position 
was  strengthened  by  the  abolition  of  payments  and  services 
in  kind,  as  well  as  by  the  legal  advantages  flowing  from  the 
principle  that  town-air  makes  free  and,  finally,  by  the 
conquest  of  the  right  of  self-government  and  legislation 
by  the  town  council.^  Each  separate  town  felt  itself  to  be  a- 
privileged  community,  gaining  right  after  right  by  struggles 
kept  up  for  hundreds  of  years,  and  forcing  its  way,  by  nego- 
tiation and  purchase,  into  one  political  and  economic  posi- 
tion after  the  other.  The  citizen-body  looked  upon  itself  as 
forming  a  whole,  and  a  whole  that  was  limited  as  narrowly 
as  possible,  and  for  ever  bound  together.  It  received 
into  itself  only  the  man  who  was  able  to  contribute,  who 

1  [For  some  account  in  English  of  recent  German  investigation  and  dis- 
cussion concerning  the  origin  of  municipal  institutions,  recourse  may  be 
had  to  the  review  of  Professor  Hegel's  work  by  Keutgen,  in  the  English 
Historical  Review,  Jan.,  1893,  to  that  of  Professor  von  Below's  pam- 
phlets by  Ashley,  in  the  Economic  Journal,  June,  1894.] 


8 


THE  MERCANTILE  SYSTEM 


satisfied  definite  conditions,  proved  a  certain  amount  of  i 
property,  took  an  oath  and  furnished  security  that  he  would 
stay  a  certain  number  of  years.  It  released  from  its  associa- 
tion only  the  man  who  solemnly  abjured  his  citizenship 
before  the  council,  who  swore  that  he  would  bear  his  share 
of  responsibility  for  the  town's  debts,  and  contribute  to  the 
taxes  of  the  town  for  a  number  of  years,  and  who  handed 
over  to  the  town  ten  per  cent,  of  his  property.  The  omnip- 
otence of  the  council  ruled  the  economic  life  of  the  town, 
when  in  its  prime,  with  scarcely  any  limit;  it  was  supported 
in  all  its  action  by  the  most  hard-hearted  town  selfishness 
and  the  keenest  town  patriotism,  —  whether  it  were  to  crush 
a  competing  neighbour  or  a  competing  suburb,  to  lay 
heavier  fetters  on  the  country  around,  to  encourage  local 
trade  or  to  stimulate  local  industries. 

Market-rights,  toll-rights,  and  mile-rights  {Meiknrechty 
are  the  weapons  with  which  the  town  creates  for  itself 
both  revenue  and  a  municipal  policy.  The  soul  of  that 
policy  is  the  putting  of  fellow-citizens  at  an  advantage, 
and  of  competitors  from  outside  at  a  disadvantage. 
The  whole  complicated  system  of  regulations  as  to  markets 
and  forestalling  is  nothing  but  a  skilful  contrivance  so  to 
regulate  supply  and  demand  between  the  townsman  who 
buys  and  the  countryman  who  sells,  that  the  former  may 
find  himself  in  as  favourable  a  position  as  possible,  the 
latter  in  as  unfavourable  as  possible,  in  the  business  of  bar- 

1  [This  was  the  rule  which  forbad  craftsmen  from  carrying  on  particular 
industries  within  a  certain  distance  of  the  town.    Cf.  the  cases  of  York  and  \ 
Nottingham  in  respect  to  the  manufacture  of  cloth,  in  Ashley,  Economic  \ 
History,  i.  pt.  ii.  (Amer.  ed.  vol.  ii.),  p.  29.] 


AND  ITS  HISTORICAL  SIGNIFICANCE,  9 


gaining.  The  regulation  of  prices  in  the  town  is,  to  some 
extent,  a  mere  weapon  against  the  seller  of  corn,  wood, 
game,  and  vegetables  from  the  country;  just  as  the  prohi- 
bition of  certain  industries  or  of  trade  in  the  rural  districts, 
and  the  restrictions  placed  upon  peddling  were  intended 
to  serve  municipal  interests.  The  acquisition  by  the  town 
of  crown-rights  {RegalienY  was  utilised,  in  the  first  instance, 
to  bring  about  a  reconstruction  of  these  regulations  for  the 
benefit  of  the  town.  Thus  the  market-toll  was  usually 
abolished  so  far  as  burgesses  were  concerned,  and  only  re- 
tained for  the  countryman  and  the  unprivileged  guest" 
{Gast),'^  A  complicated  system  of  differential  tolls  was 
everywhere  devised,  by  which  some  towns  were  favoured 
and  others  put  at  a  disadvantage,  in  each  case  either  in 
return  for  corresponding  concessions  or  in  accordance 
with  the  varying  hopes  or  fears  to  which  trade  gave  rise. 
The  same  purpose  was  served  by  the  acquisition,  wherever 
possible,  of  rights  of  toll  on  rivers  and  highroads  in  the 
neighbourhood.  Day  by  day,  as  need  arose,  particular 
articles  had  heavier  dues  imposed  upon  them,  or  were 
forbidden  for  one  or  more  market  days,  or  excluded 
altogether;  the  importation  of  wine  and  beer,  for  in- 
stance, from  towns  in  the  vicinity  was  prohibited  or  re- 
stricted on  countless  occasions.  The  prohibition  of  the 
export  of  grain,  wool,  and  woolfells  was  among  the  most 
usual  means  for  regulating  the  local  market  in  the  local 

1  [Regalien,  in  Germany,  droits  regaliens,  in  France,  were  rights  regarded, 
as  peculiarly  attached  to  the  sovereign  authority,  such  as  the  levying  of 
taxes,  the  coining  of  money,  etc.] 

2  [Compare  the  treatment  of  "  foreigners  "  in  English  towns ;  Gross,  Gild 
Merchant,  i.  43 ;  Ashley,  Economic  History,  i.  pt.  ii.  (Amer.  ed.  vol.  ii.),  ^  25.] 


10 


THE  MERCANTILE  SYSTEM 


interest;  and  it  constantly  led  to  a  complete  stoppage  of 
trade.  Such  a  stoppage  was  the  severest  method  of  coercion 
that  could  be  employed  in  the  competitive  struggle;  and, 
though  it  frequently  hurt  those  who  resorted  to  it,  it  was 
also  often  employed,  especially  by  the  stronger  party,  with 
great  success  and  profit  to  itself.  The  limitation  of  the  ex- 
portation of  the  currency  and  of  the  precious  metals  fre- 
quently occurs  in  the  case  of  the  towns  as  early  as  the 
thirteenth  century.  In  intermunicipal  commerce  we  find 
the  first  germ  of  the  theory  of  the  balance  of  trade.  It  is  to 
be  seen  in  the  efforts  the  towns  were  constantly  making  to 
bring  about  a  direct  exchange  of  wares,  and  to  render  this 
compulsory,  —  as  in  the  Baltic  trade,  —  by  statutes  and 
ordinances  which  aimed  at  preventing  the  regular  flow  of 
the  precious  metals  to  foreign  countries. 

All  the  resources  of  municipal  diplomacy,  of  constitu- 
tional struggle  between  the  Estates  {Stdnde),^  and,  in  the 
last  resort,  of  violence,  were  employed  to  gain  control  over 
trade-routes  (Strassenzwang)  and  obtain  staple  rights^:  to 
bring  it  about  that  as  many  routes  as  possible  should  lead 
to  the  town,  as  few  as  possible  pass  by;  that  through  traffic, 
by  caravan  or  ship,  should,  if  possible,  be  made  to  halt 
there,  and  goods  en  route  exposed,  and  offered  for  sale  to 

1  ["  An  assembly  of  Estates  is  an  organised  collection,  made  by  repre- 
sentation or  otherwise,  of  the  several  orders,  states,  or  conditions  of  men 
who  are  recognised  as  possessing  political  power;  "  Stubbs,  Constitutional 
History  of  England,  ii.  §  158.  The  reference  in  the  text  is  to  the  efforts  of 
the  towns  to  secure  advantages  by  concerted  action  in  the  imperial  Diet  or 
in  the  territorial  assemblies.] 

2  [The  staple  rights  of  German  towns  differed  from  the  English  staple  in 
that  they  were  maintained  primarily  in  the  interests  of  the  several  towns. 
Their  nature  is  explained  in  the  sentence  next  but  one  in  the  text.] 


AND  ITS  HISTORICAL  SIGNIFICANCE.  11 


the  burgesses.  The  whole  well-rounded  law  as  to  strangers 
or  "foreigners"  {Gast-  oder  Fremdenrechf)  was  an  instru- 
ment wherewith  to  destroy,  or,  at  all  events,  to  diminish  the 
superiority  of  richer  and  more  skilful  competitors  from  out- 
side. Except  during  a  fair,  the  foreigner  was  excluded  from 
all  retail  trade,  allowed  only  to  remain  a  certain  time,  and 
prohibited  from  lending  money  to  or  entering  into  partner- 
ship with  a  burgess.  He  was  burdened  with  heavier  dues, — 
fees  for  setting  up  a  stall,  for  having  his  goods  weighed, 
and  for  the  services  of  brokers  and  exchangers.  The  gild- 
organisation,  which  arose  out  of  local  market-privileges, 
and  was  formed  with  local  objects,  reached  its  aim, —  which 
was  to  ensure  to  each  master  and  each  craft  a  livelihood 
suitable  to  their  station  in  life,  —  chiefly  by  the  readiness  of 
the  town  council,  whenever  it  appeared  to  them  necessary, 
to  limit  for  a  season,  or  permanently,  the  entrance  into 
the  town  of  bread  and  flesh,  beer  and  wine,  and  wares  of 
all  kind  from  far  or  near,  as  well  as  to  forbid,  for  a  year 
or  more,  the  admission  of  new  masters  to  a  particular 
occupation.  In  short,  the  town  market  formed  a  complete 
system  of  currency,  credit,  trade,  tolls,  and  finance,  shut  up 
in  itself  and  managed  as  a  united  whole  and  on  a  settled 
plan;  a  system  which  found  its  centre  of  gravity  exclusively 
in  its  local  interests,  which  carried  on  the  struggle  for 
economic  advantages  with  its  collective  forces,  and  which 
prospered  in  proportion  as  the  reins  were  firmly  held  in 
the  council  by  prudent  and  energetic  merchants  and 
patricians  able  to  grasp  the  whole  situation. 

What,  then,  we  have  before  our  eyes  in  the  Middle  Ages 
are  municipal  and  local  economic  centres  whose  whole 


12 


THE  MERCANTILE  SYSTEM 


economic  life  rests  upon  this,  —  that  the  various  local  inter- 
ests have,  for  the  time,  worked  their  way  into  agreement, 
that  uniform  feelings  and  ideas  have  risen  out  of  common 
local  interests,  and  that  the  town  authorities  stand  forward  i 
to  represent  these  feelings  with  a  complete  array  of  protec- , 
tive  measures;  measures  that  differed,  of  course,  from 
place  to  place  and  from  period  to  period,  according  as 
the  provision  of  the  local  market  or  the  prosperity  of  a 
particular  industry  or  trade  seems  to  be  most  important 
at  the  time.^  The  whole  of  this  municipal  economic 
policy,  with  all  its  local  partiality,  was  justified  so  long  as 
thte^progress  of  civilisation' and  of  economic  well-being 
depenH^ed  pri^^  on  the  prosperity  of  the  towns.  This 
prosperity  could  rest  upon  no  other  "  mass-psychological 
cause-complex"  than  corporate  selfishness:  and  new  eco- 
nomic  structures  could  arise  only  in  oases  thus  privileged, 
and  not  on  the  broad  bases  of  whole  states.  So  long  as  this 
selfish  feeling  of  community  within  comparatively  narrow 
circles  also  brought  about  an  energetic  movement  forward, 
it  justified  itself,  in  spite  of  a  coarseness  and  violence  which 
we  to-day  not  only  disapprove  but  even  scarcely  understand :  ^ 
not  until  the  system  began  to  support  an  easy  luxuriousness 
and  sloth  did  it  degenerate.  It  had  then  to  be  replaced  by 
other  mass-psychological  elements  and  processes,  and  by 
other  social  forms  and  organisation. 

1  We  may  remember  the  armed  forays  of  gildsmen  to  hunt  down  those 
who  ventured  to  work  surreptitiously  at  crafts  in  the  country  districts 
{Bdiihaseri,  as  they  were  called  in  low  German),  the  innumerable  military  j 
expeditions,  sieges,  and  devastations  of  towns,  caused  by  mutual  trade  ; 
jealousy,  as  well  as  the  destruction  of  suburbs  for  the  same  reason,  such  ; 
as  must  be  laid  to  the  charge  of  Danzig  in  1520,  1566,  and  1734,  and  oi  \ 
Magdeburg  during  the  Thirty  Years'  War. 


AND  ITS  HISTORICAL  SIGNIFICANCE. 


13 


Some  limitations  were,  doubtless,  always  imposed  on 
communal  selfishness  by  the  legal  and  moral  ties  created 
by  the  common  life  of  the  church,  by  the  existence  of  the 
German  empire,  and,  so  far  as  the  rural  districts  were 
concerned,  by  the  power  of  the  territorial  principalities, 
which  early  began  to  make  their  appearance.  But  in  the 
earlier  period  these  limitations  were  so  lax,  so  meaningless, 
that  they  were  scarcely  regarded,  so  long  as  neither  empire, 
church,  nor  territory  had  given  birth  to  any  economic  life 
of  its  own  or  any  powerful  economic  organisation.  With 
the  transformation  and  enlargement  of  commerce,  the 
growth  of  the  spirit  of  union,  and  the  consciousness  of 
interests  common  to  whole  districts,  with  the  augmented 
difficulties  in  the  way  of  a  proper  organisation  of  economic 
life  on  the  basis  merely  of  town  and  village  interests,  and 
the  increasing  hopelessness  of  victory  over  the  anarchy  of 
endless  petty  conflicts,  efforts  and  tendencies  everywhere 
made  their  appearance  towards  some  larger  grouping  of 
economic  forces. 

The  town-leagues,  reaching  over  the  heads  of  the  princes 
and  of  the  inhabitants  of  the  rural  districts,  but  still  main- 
taining the  old,  selfish  policy  towards  the  country  immedi- 
ately around,  aimed  at  satisfying  certain  farther-reaching 
interests  and  needs  of  trade;  but  such  an  attempt  could 
not  permanently  succeed.  The  greater  cities  sought  to 
widen  themselves  into  territorial  states  by  the  acquisition 
of  villages,  estates,  lordships,  and  country  towns.  In  this 
the  great  Italian  communes  succeeded  completely,  certain 
Swiss  towns  and  German  imperial  cities  at  least  in  part; 


14 


THE  MERCANTILE  SYSTEM 


some  also  of  the  more  vigorous  Dutch  provinces,  though 
they  were  not  so  originally,  came  to  be  hardly  distinguish-] 
able  from  enlarged  town-territories.  In  Germany,  however,  1 
At  was,  as  a  rule,  the  territorial  princedom,  founded  on  the! 
/  primitive  association  of  the  tribe,  and,  resting  on  the  cor-; 
/  porate  Estates  of  communes  and  knights,  which  created  the  ! 
/    new  political  unit, —  a  unit  which  had  for  its  chafacter- 
/     istic  the  association  of  town  and  country,  the  association 
of  a  large  number  of  towns  on  one  side,  and,  frequently, 
on  the  other  side,  of  several  hundred  contiguous  square 
miles  of  country  subject  to  the  same  authority.  During! 
,     the  period  from  the  fifteenth  to  the  eighteenth  century, 
1     these  territories,  in  constant  struggle  with  other  institu- 
tions, grew  not  only  into  political  but  also  into  economic 
bodies.    It  was  now  the  territorial  organism  that  carried  \ 
j  progress  forward,  and  formed  the  vehicle  of  economic  and  | 
/  political  development.  Territorial  institutions  now  became 
I    the  main  matters  of  importance,  just  as  municipal  had 
been;  like  them,  they  found  a  centre  round  which  to  gravi- 
tate ;  and  they  sought  to  shut  themselves  off  from  the  outer 
I    world,  and  to  harmonise  and  consolidate  their  forces  at 
I    home.    And  thus  arose  an  enclosed  territorial  area  of  pro- 
[    duction  and  consumption,  a  territorial  division  of  labour, 
^    a  territorial  system  of  measures  and  weights  and  cur- 
rency, —  an  independent  territorial  economic  body,  which 
had  its  own  centre  of  gravity,  was  conscious  of  it,  and 
acted  as  a  unit  in  accordance  therewith. 

No  doubt  this  policy  was  pursued  with  varying  vigour 
and  success  in  the  different  territories.  Where  the  impulse 
was  given  by  a  highly-developed  and  all-powerful  industrial 


AND  ITS  HISTORICAL  SIGNIFICANCE.  15 

or  commercial  town, —  as  in  the  cases  of  Florence,  Milan, 
and  Venice,  —  there  we  very  early  find  an  economic  policy 
pursued  with  great  success;  a  policy  which  rose  out  of  the 
older  municipal  interests,  and  which  performed  wonders. 
The  House  of  Luxemburg,  in  Bohemia,  and  the  House  of 
Burgundy,  in  Flanders  and  on  the  lower  Rhine,  were,  also, 
both  of  them  able  at  an  early  period  to  guide  their  lands  in 
the  direction  of  a  territorial  policy  on  a  large  scale.  But,  in 
Germany,  most  of  the  princes  were  without  the  extensive 
dominions  necessary  for  the  purpose:  in  some  places  the 
towns,  in  other  the  knights,  remained  outside  the  new 
territorial  commonweal.  The  most  distinguished  princes  at 
the  beginning  of  the  sixteenth  century,  those  of  the  Saxon 
house,  were  the  lords  of  lands  scattered  in  fragments  all 
along  the  military  thoroughfare  of  central  Germany,  from 
Hesse  to  Silesia;  and,  to  make  things  worse,  frequently 
partitioned  these  lands  among  the  various  branches  of  the 
family.  And  even  what  one  of  the  Saxon  princes  hap- 
pened to  rule  at  any  particular  time  was  made  up  of  a 
number  of  separate  districts,  geographically  distinct. 
The  situation  of  the  other  territories  had  much  the  same 
disadvantages. 

Yet  grave  as  were  these  difficulties,  and  obstinate  as  was 
the  conservative  opposition  of  the  older  economic  institu- 
tions, especially  those  of  the  towns,  we  cannot  help  seeing, 
in  all  directions,  that  the  necessities  of  real  life  were 
relentlessly  driving  society  toward  the  territorial  organisa- 
tion. The  old  forms  of  loose  combination  characteristic  of 
the  Middle  Ages,  like  the  town-leagues  and  alliances  to 
maintain  the  public  peace,  the  town  toll-system  and  staple, 


16 


THE  MERCANTILE  SYSTEM 


the  town  currency,  the  everlasting  hostility  of  town  and 
country,  all  the  old  mediaeval  corporations,  these  became 
every  day  greater  hinderances  in  the  way  of  trade  and  eco-  j 
nomic  progress.  People  had  to  get  free  from  them  and  f 
make  their  way  to  larger  unities,  to  associations  of  districts, 
and  to  more  far-sighted  coalitions  of  interests,  such  as 
were  to  be  found  in  the  territorial  assemblies  {Landtage) 
and  at  the  courts  of  the  princes.  The  more  completely  ! 
the  princely  territories  coincided  with  old  boundaries  and 
primitive  tribal  feelings;  the  stronger  happened  to  be  the 
system  of  parliamentary  Estates  binding,  first,  towns 
together  and  nobles  together,  and  then  the  whole  muni- 
cipal estate  to  the  whole  estate  of  the  nobles;  the  more 
intelligent  and  forceful  were  the  princes  who  guided  the 
movement,  with  frugal  and  competent  officials  to  help 
them;  the  quicker  proceeded  the  process  of  economic 
assimilation.  To  be  sure  it  never  ran  its  course  without 
meeting  with  the  bitterest  opposition. 

What  trouble  the  Hohenzollern  princes  ^  in  Brandenburg 
had  before  they  subjected  to  themselves,  even  externally 
and  in  military  matters,  the  nobles  and  towns  of  the  land 
The  severance  of  the  Brandenburg  towns  from  the  Hanseati( 
League  and  the  abolition  of  their  independent  right  o; 
alliance  were  barely  accomplished  during  the  years  1448  tc 
1488.  The  towns  did  not,  however,  surrender  the  right  tc 
pursue  an  independent  commercial  policy  till  long  aftei! 
this.    The  very  important  treaties  with   regard  to  th( 

1  [The  reader  may  be  assisted  in  following  the  course  of  the  subsequen 
argument  by  referring  from  time  to  time  to  the  list  of  territories  subject  t< 
the  house  of  Hohenzollern  given  in  Appendix  II.] 


AND  ITS  HISTORICAL  SIGNIFICANCE,  17 

Frankfurt  Staple  (1490-15 12)  were  certainly  afterwards  con- 
firmed by  the  princes  concerned.  But  the  initiative  still 
fcame  from  the  towns;  and  this  independence  was  retained 
jas  late  as  the  Thirty  Years'  War,  though  in  a  lessened  meas- 
jliire,  and  with  increasing  moderation  and  prudence  in  its 
pxercise.  Throughout  the  sixteenth  century  we  find  the 
princes  of  Brandenburg  and  their  neighbours  giving  their 
attention  more  and  more  closely  to  matters  of  this  kind. 
In  the  commercial  controversies  between  Pomerania  and 
Brandenburg  (1562  and  1572),  both  the  princely  and  the 
municipal  authorities  took  part,  although  it  was  Frankfurt 
and  Stettin  that  engaged  in  the  trial  before  the  Imperial 
Chamber  {Reichskaifimergericht),  The  treaties  of  mutual 
defence  with  towns  in  other  territories  like  Llineburg,^ — • 
which  were  made  as  late  as  the  time  of  Joachim  I.  of  Bran- 
denburg,—  seemed  in  the  next  period  no  longer  suitable, 
since  they  aroused  the  distrust  of  the  Llineburg  princes. 
As  the  maintenance  of  the  public  peace  passed  into  the 
hands  of  the  princes,  to  them,  and  not  to  the  towns,  it  fell 
to  negotiate  with  one  another  for  its  strict  preservation; 
for  instance,  in  the  treaty  between  Brandenburg  and 
Pomerania  of  July  29,  1479,^  that  between  Branden- 
burg and  Magdeburg  of  July  24,  1479.'^  The  negotiations 
for  commercial  treaties,  as  well  as  the  signature  of  the 
treaties  themselves,  between  Brandenburg  and  Poland  in 
1514/  1524-27,^  1534,^  and  1618,^  were  the  work  of  the 

1  1484 :  Riedel,  Cod.  dipl.  brandenb,  ii.  5,  417.    1501 :  ib.  ii.  6,  177. 

2  Ib.  ii.  5,  305.  3  73.  ii.  5^  302.  4  ijj.  iii.  3,  248  and  ii.  6,  258, 
5  Ib.  \.  23,  426  and  ii.  6,  346.           6      iii.  387. 

^  Oelrichs,  Beitrage  zur  brandenburgischen  Geschichte^  265. 
C 


18 


THE  MERCANTILE  SYSTEM 


princes  and  not  of  the  towns.  At  the  congresses  to  deai 
with  the  navigation  of  the  Elbe  and  Oder  in  the  sixteentl 
century,  some  of  the  ambassadors  came  from  Frankfurt^' 
but  it  was  those  sent  by  the  elector  who  led  the  discussioiig 
The  treaty  with  "  the  common  merchant ' '  about  transi 
through  the  Mark  of  Brandenburg  was  made  by  Joachim  I.J 
and  not  by  the  Brandenburg  towns.  ^  In  short,  the  reprei 
sentation  of  the  country  in  the  way  of  commercial  policj 
passed  over,  slowly  but  surely,  from  the  towns  to  tht 
princely  government.  And  if,  in  spite  of  this,  th« 
impression  spread,  about  1600,  that  all  the  trade  o 
the  country  was  coming  to  grief,  the  explanation  is  not  tc 
be  found  in  this  transference,  but  in  the  fact  that  th( 
prince's  policy  was  too  feebly  pursued,  and  that  he  wa* 
really  at  a  disadvantage  in  dealing  with  Saxony,  Silesia 
Magdeburg,  Hamburg,  and  Poland. 

While  thus  the  authority  of  the  territorial  prince  {du 
Landeshoheit),  —  the  jus  territorii  et  superioritatis^  —  re! 
ceived  a  new  meaning  in  relation  to  the  representation  o 
economic  interests  towards  the  world  outside,  it  is  a  stil; 
more  important  fact  that,  within  the  country  itself,  thi 
territorial  government  pushed  on  energetically,  by  mean 
of  resolutions  of  the  Estates  and  ordinances  of  the  prince 
towards  the  creation  of  new  law.  It  was  not  as  if  there  ha( 
not  already  been,  here  and  there,  a  territorial  law.  In  th 
land  of  the  Teutonic  Order  the  Handfeste  of  Kulm  ha( 
been  in  existence  since  1233;  in  the  principality  of  Bres 

1  Berl.  St.  Archiv.  R.  78,  29.  Fol.  62. 

2  {Handfeste^  a  term  derived  from  the  impressing  of  the  thumb  on  wai 
at  the  foot  of  a  document,  instead  of  a  seal,  was  used  for  various  kinds  c 
public  documents,  among  others,  for  territorial  ordinances.] 


AND  ITS  HISTORICAL  SIGNIFICANCE,  19 


:5,u,  the  "  law  of  the  country "  {Landrecht)  since  1346. 
\vX  local  law  was  everywhere  the  stronger.  Not  till  the 
iteenth  and  sixteenth  centuries  did  the  judicial  decrees  of 
he  courts  of  the  princes  of  the  land,  the  so-called  laws 
f  the  land  "  {Land^^echte),  the  state  ordinances,  the  terri- 
orial  police  regulations,  and  so  on,  begin  their  victorious 
areer.  An  indisputable  need  shewed  itself  for  a  new  lawj 
iealing  with  civil  and  criminal  matters,  succession  and 
irocedure,  and  common  to  the  whole  country.  Out  of  the 
xercise  of  the  princely  regalia  sprang  ordinances  for  the 
orests,  for  hunting,  for  fishing,  for  mining,  for  the  use  of 
treams,  for  navigation,  and  for  the  construction  of  dikes; 
•rdinances  which  were  applicable  to  the  whole  country, 
nd  supplied  its  economic  life  with  uniform  rules.  The 
lew  life  of  the  press,  of  the  reformed  faith,  of  the  newly-in- 
tituted  schools,  and  of  the  system  of  poor-relief,  received, 
lot  a  local,  but  a  territorial  organisation,  by  means  of  a 
egislation  which  soon  began  to  penetrate  pretty  far  into 
batters  of  detail.  No  less  need  for  territorial  legisla- 
tion was  seen  in  regard  to  trade  and  industry,  weights 
nd  measures,  currency  and  highways,  markets  and  fairs. 

But  this  construction  of  new  territorial  law  was  brought 
bout,  and  the  law  itself  enforced,  in  very  different  ways  in 
he  various  lands.  While  the  state  of  the  Teutonic  Order, 
s  early  as  the  fourteenth  and  fifteenth  century,  shewed 
ome  fair  beginnings  of  such  a  legislation;  while  the  larger 
tates  of  Southwestern  Germany,  in  consequence  of  their 
ligher  economic  development  and  earlier  civilisation, 
hewed,  towards  1500  and  during  the  course  of  the  six- 
eenth  century,  much  more  extensive  activity  in  this 


20 


THE  MERCANTILE  SYSTEM 


respect;  Brandenburg,  Pomerania,  and  other  northern  terri- 
tories lagged  behind.  We  must,  of  course,  allow  that  in 
Brandenburg  the  new  judicial  tribunal  {Kammergerichf)A 
created  under  the  influence  of  the  ideas  of  centralisation 
characteristic  of  Roman  law,  as  well  as  the  Joachimica^^ 
and,  somewhat  later,  various  influential  legal  writings,  like 
the  Consuetudines  of  Scheplitz^  tended  towards  legal  uni- 
formity; nevertheless  Brandenburg  did  not  arrive,  during 
this  period,  at  a  recognised  "  law  of  the  land,"  or  at  a  gener- 
ally accepted  regulation  of  the  relations  between  peasants 
and  their  manorial  lords.  The  attempt,  during  the  years 
1490-1536,  to  bring  the  towns  under  rules  of  police 
and  administration  which  should  be  uniform  for  the 
whole  territory,  was  only  partially  and  temporarily  suc- 
cessful ;  and  Stettin,  Stralsund,  and  other  towns  in 
Pomerania,  Konigsberg  in  Prussia,  and  the  old  town" 
of  Magdeburg  in  the  archbishopric  retained  almost 
down  to  1700  a  position  of  independence  like  that  of 
imperial  cities.  The  admonition,  found  in  the  general 
ordinances  of  police  which  were  directed  to  the  towns 
of  Brandenburg  from  15 15  onward,  that  the  Berlin  ell 
should  be  the  regular  measure  of  length  all  over  the  land, 
the  Erfurt  pound  for  the  weight  of  wax  and  spices,  and  the 
weights  of  Berlin  for  meat,  copper,  tin,  and  heavy  wares, 
remained  for  some  time  but  a  pious  wish.    Even  two 

1  [1516  is  commonly  assigned  as  the  date  of  its  establishment.  For  an 
account  of  it  in  English,  see  Tuttle,  History  of  Prussia,  to  the  Accession  oj 
Frederick  the  Great^  p,  78.] 

2  [The  Constitutio  Joachimica\w2LS  issued  in  1527  by  Joachim  I.  It  regu- 
lated family  law  and  the  law  of  inheritance.]  -j 

3  [1566-1634.]  m 


AND  ITS  HISTORICAL  SIGNIFICANCE,  21 


generations  later,  the  most  that  the  Elector  Augustus  of 
)axony  had  succeeded  in  securing  was  the  use  of  the 
Dresden  bushel  on  his  demesne  estates. 

'While,  for  instance,  in  Wlirtemberg  the  so-called 
'ordinances  of  the  land  "  {Landesordnungen)  in  rapid  suc- 
:ession,  from  1495  onward,  had,  with  ever  widening  scope, 
)rought  the  economic  activity  of  the  country  within  their 
egulating  lines,  so  that  a  whole  series  of  the  most  im- 
)ortant  crafts  were  subjected  to  ordinances  common  to 
he  whole  duchy  even  before  the  Thirty  Years'  War  (such 
,s  the  butchers,  the  bakers,  the  fishmongers,  the  cloth- 
aakers,  the  copper-smiths,  the  pewterers,  the  workmen  in 
he  building  trades,  and,  in  1601,  even  the  whole  body 
if  merchants  and  dealers),  and  thus  the  whole  land  had 
Iready  obtained  an  economic  unity;  we  find  in  Branden- 
>urg,  during  this  period,  only  one  or  two  quite  isolated 
ild  statutes   issued   by  the   princes  that  were  not  of 

purely  local  nature,  —  such  as  that  for  the  weavers  of 
he  New  Mark,  that  for  the  linenweavers  of  the  whole 
/[ark,  and  that,  about  1580,  for  the  skinners  and  linen- 
leavers  of  a  number  of  towns  together.  The  only 
vidence  of  any  tendency  towards  territorial  unity  is  to 
le  found  in  the  circumstances  that,  from  1480  onward, 
t  was  usual  to  seek  the  confirmation  of  the  prince,  as 
^ell  as  of  the  town  council,  for  the  statutes  of  every  local 
ild  {Innmig)  ;  and  that  from  about  1580  the  prince's 
hancery  began  gradually  to  add  to  the  confirmation  a 
lause  as  to  the  power  of  revocation.  This,  however, 
^as  not  the  regular  practice  till  after  1640  ;  and  it 
^as  not  till  1 690-1 695  that  the  right  was  actually  made 


22 


THE  MERCANTILE  SYSTEM 


use  of.  The  practice  of  granting  to  the  several  artisal 
associations  charters  drawn  up  in  identical  terms  datJ 
from  1731.  m 

Like  the  separate  local  gild  privileges,  the  local  towl 
privileges  still  maintained  themselves  unimpaired;  the  mosi 
that  could  be  gained  by  the  electoral  government  was,  tha 
the  burgesses  of  other  Brandenburg  towns  should  be  treatec 
a  little  better  than  men  from  Stettin  or  Breslau.  It  needec 
an  ordinance  of  the  prince  in  1443  ^  to  open  the  Frankfur 
Leather  Fair  to  the  Berlin  shoemakers;  and  the  Electoi 
added,  apologetically,  that  this  should  not  prejudice  thr 
claims  of  the  shoemakers  of  other  towns  who  had  not  ye 
frequented  the  Frankfurt  fair.  The  surrender  of  inheri 
tances  by  one  town  of  the  Mark  to  another,  without  th« 
enormous  withdrawal-charges  hitherto  made,  was  the  grad 
ual  result  of  treaties  between  the  towns  themselves.  As  lat( 
as  1 48 1  the  men  of  Spandau  introduced  a  high  withdrawal 
tax,  in  order  to  prevent  their  rich  men  from  trying  to  get  bur 
gess-rights  in  Berlin  and  transferring  themselves  thither/^. 

Thus  the  question  at  issue  was  not,  at  the  outset 
whether  the  various  town  privileges  should  be  blended  ii 
one  body  of  rights  enjoyed  equally  by  every  citizen  of  th( 
territory,  but  simply  whether  the  princely  governmen 
should  secure  a  moderate  increase  of  its  power  as  agains 
each  particular  town.  Efforts  in  this  direction  are  to  h 
seen  in  the  approval  by  the  prince  of  the  town  councillors 
the  enquiries  into  their  administration,  beginning  abou 
1600,  and  the  practice  of  granting  special  privileges  am 
concessions.    This  last  had  gained  a  firm  foothold  fron 

1  Riedel,  i.  23,  224.  2      j.  ug. 


AND  ITS  HISTORICAL  SIGNIFICANCE,  23 


about  1500;  and  in  some  respects  it  prepared  the  way 
for,  and  helped  to  create,  that  right  of  issuing  general 
ordinances  which  was  recognized  as  belonging  to  the 
prince  in  the  seventeenth  and  eighteenth  centuries.  The 
charters  of  privilege  with  regard  to  markets  and  mills, 
apothecaries,  printers,  copper-hammers,  paper  mills,  and 
the  like,  the  concessions  made  to  persons  establishing 

! industries  in  connection  with  their  estates,  the  personal 
permits  issued  to  individual  artisans  and  dealers  of  all  sorts, 
allowing  them  to  carry  on  their  business  without  being  mem-  * 
ibers  of  a  gild, —  these  were  all  mere  inroads  by  the  prince 
into  the  exclusive  town  economy;  and  yet,  if  they  were 
only  numerous  enough,  they  necessarily  made  the  territorial 
j  authority,  rather  than  the  town  council,  the  chosen  guide 
of  the  people  in  its  economic  life. 

But  the  princely  power  not  only  obtained  an  increase  of 
its  influence  in  these  individual  cases;  it  had  the  same 
I  experience  more  widely,  in  its  character  of  mediator  and 
peacemaker.  Abundant  opportunity  was  presented  for  its 
intervention  by  the  conflicts  between  town  and  country, 
which  were  especially  bitter  in  the  northeast  of  Ger- 
many. The  old  regulation  of  the  town  market,  the  mile- 
right,  the  prohibition  of  industry  in  the  country,  the 
obligation  imposed,  if  possible,  by  every  town  upon  the 
people  of  the  vicinity  to  carry  thither  all  their  produce 
and  buy  there  all  they  needed, —  all  this  gave  frequent 
occasion  for  intervention.  The  proceedings  of  the  terri- 
torial assemblies  from  the  fifteenth  to  the  seventeenth  cen- 
turies in  Brandenburg,  Pomerania,  and  Prussia  are  largely 
occupied  with  matters  of  this  sort.    The  rural  districts,  and 


24 


THE  MERCANTILE  SYSTEM 


the  squires  (die  Ritterschaft)  in  their  name,  complain  that 
the  countryman  is  shamefully  cheated  when  he  comes  to 
sell  his  corn,  wool,  and  cattle  in  the  neighbouring  town, 
that  price-lists  are  drawn  up  without  the  assistance  of  rep- 
resentatives of  the  squires,  that  they  are  overreached  in 
weight  and  measure,  that  the  craftsmen  unite  against  them, 
that  countrymen  are  prevented  from  selling  to  strangers 
and  dealers  at  their  own  doors,  that  all  the  legislation  as 
to  markets  and  forestalling  is  devised  to  their  hurt,  as  in 
the  rules  against  Scotch  and  Nuremberg  peddlers,  that  the 
towns  receive  runaway  peasants,  without  license  from 
their  lords,  that  the  gilds  want  to  pursue  concealed  crafts- 
men in  the  country  without  paying  any  regard  to  the  court 
of  the  lord  of  the  manor  {das  Gericht  des  Gutsherrn), 
that  by  the  prohibition  of  brewing  in  the  country  peasants 
and  knights  are  compelled  to  buy  beer  in  the  towns  and 
are  there  overcharged,  that  people  have  to  make  payments 
in  barley  when  it  would  be  more  profitable  to  export  it, 
and  so  on,  and  so  on. 

The  towns  take  their  stand  on  their  ^^good  old  laws,'* 
upon  their  privileges,  which,  they  declare,  are  being 
continually  encroached  upon  by  permits  to  country  crafts- 
men, by  country  brew-houses,  by  foreign  peddlers,  loose 
rabble,  horse  dealers,  and  cattle  dealers;  the  nobility 
themselves,  they  say,  carry  on  trade,  buy  the  peasants' 
produce  and  sell  it  to  travelling  dealers,  and  get  the  iron 
and  other  things  they  need  from  the  Scots  ;  moreover, 
the  nobles  claim  the  right  of  exporting  their  produce 
whenever  they  like,  to  the  hurt  of  the  towns.  Not  con- 
tent with  this,  the  towns  complain  of  the  government 


AND  ITS  HISTORICAL  SIGNIFICANCE.  25 


itself, —  that  it  sells  the  wood  of  its  forests  dearer  to  the 
towns  than  to  its  vassals,  that  it  authorises  foreign  dealers 
and  peddlers,  that  it  is  not  sufficiently  severe  and  exclu- 
sive in  its  treatment  of  the  Jews,  and  that  it  does  not  keep 
the  nobles  out  of  trade. 

When  matters  like  these  were  being  all  the  time  dealt 
with  in  the  legislative  assemblies  in  long-winded  memorials 
and  counter-memorials,  it  was  natural  that  the  municipal 
prohibitions  of  export  or  import,  and  the  prohibitory 
regulations  of  the  town  should  play  an  important  part  in 
the  discussions.  It  was  not  a  matter  of  indifference  to 
the  rural  districts  in  Pomerania  and  Magdeburg  if  one  fine 
day  the  council  of  Stettin  prohibited  the  export  of  corn, 
and  it  was  of  the  greatest  moment  to  the  townsmen  whether 
the  nobility  could  claim  exemption  from  such  a  prohibi- 
tion. It  was  of  importance  for  the  whole  country  that,  in 
East  Prussia,  at  the  beginning  of  the  fifteenth  century,  each 
country-town  could  impose  a  prohibition  of  export  on  the 
neighbouring  country-town  without  waiting  for  the  sanc- 
tion of  the  High  Master  {Hochmeister), 

From  all  this  confusion  arising  from  local  economic 
policy  there  was  only  one  way  out:  the  transference  of 
authority  in  the  most  important  of  these  matters  from  the 
towns  to  the  territorial  government,  and  the  creation  of  a 
system  of  compromise  which  should  pay  regard  to  the 
opposed  interests,  bring  about  an  adjustment  on  the  basis 
of  existing  conditions,  and  yet,  while  necessarily  and 
naturally  striving  after  a  certain  self-sufficiency  of  the  land 
in  relation  to  the  outside  world,  should  also  strive  after  a 
greater  freedom  of  economic  movement  within  it. 


26 


THE  MERCANTILE  SYSTEM 


In  the  Prussian  lands  of  the  Teutonic  Order  it  was 
recognised  as  a  fundamental  principle  as  early  as  1433-34, 
that  in  future  no  Prussian  town  should  obstruct  another  in 
the  export  of  corn.^  In  Brandenburg,  likewise,  the  squire- 
archy {Ritters chaff)  obtained  for  themselves  the  right  of 
freely  exporting  their  produce  from  the  country  as  a  gen- 
eral thing,  and  for  the  peasants,  at  least,  a  freedom  of 
choice  as  to  which  town  in  the  electorate,  near  or  far,  they 
should  take  their  produce  to.^  The  much-disputed  ques- 
tion whether  foreign  dealers  should  be  permitted  to  go 
about  buying  and  selling  was  differently  settled  from  time 
to  time  in  different  assemblies  —  according  as  the  towns  or 
the  squires  happened  to  be  the  stronger;  but  at  any  rate 
they  came  to  resolutions  which,  whether  they  threw  open 
the  country  or  closed  it,  bound  the  whole  of  it  equally.^  The 
keen  opposition  of  the  agrarian  interests  to  the  old  town 
policy,  the  advocacy  by  the  agrarian  party  of  free  peddling, 
of  a  reform  of  "guest-right"  {Gastrecht)  ^  and  of  the  law 
as  to  markets  and  forestalling,  led  in  Brandenburg,  Pome- 
rania,  and  Prussia,  —  partly  in  consequence  of  the  strength 
of  the  squirearchy,  partly  in  consequence  of  the  increase  of 
traffic  and  of  general  prosperity,  —  to  a  more  considerable 
limitation  of  town  privileges  before  the  Thirty  Years'  War 
than  was  the  case  for  some  time  after  it :  for  the  frightful 

1  Acts  of  the  Prussian  Assembly  of  Estates  {Standetag),  i.  160,  605,  655, 
et  al. 

2  Resolution  of  the  local  assembly  {Landtagsabschied)  of  1536  and  1540 ; 
Mylius  vi.  i,  36,  59. 

3  See  on  this  point  the  instructive  essay  of  H.  Riemann,  The  Scots  in 
Pomerania  in  the  i6th  and  ijth  centuries,  and  their  conflict  with  the  gilds, 
Zeitschr,  f  preuss,  Gesch.  iii.  597-613. 


AND  ITS  HISTORICAL  SIGNIFICANCE,  27 


economic  retrogression  which  the  war  caused,  seemed  to 
call  for  the  systematic  employment  of  every  possible  means 
for  encouraging  the  industrial  life  of  the  towns.  But  every 
success  of  the  squirearchy  in  securing  parliamentary  reso- 
lutions or  governmental  ordinances  meant  a  freer  traffic  in 
the  country  and  greater  liberality  towards  strangers.  The 
fundamental  principles  which  had  governed  legal  relations 
between  town  and  country  remained,  indeed,  unchanged. 
Thus  the  belief  in  the  hurtfulness  of  forestalling, — which 
did  nothing,  it  was  thought,  but  send  up  prices,  — passed 
over  almost  intact  from  the  town  statutes  into  the  law  of  the 
land.  Nevertheless,  it  was  an  essential  change  that  a  regu- 
lation that  in  1400  rested  on  a  confused  congeries  of  local 
regulations,  customs,  privileges,  and  alliances,  became, 
about  1600,  a  law  of  the  land  {Landrecht)  which  encom- 
passed, with  tolerable  uniformity,  the  whole  territory. 

Associated  with  the  transformation  described  above  was 
the  loss  of  their  staple  privileges  by  all  the  small  towns 
in  the  fifteenth  and  sixteenth  centuries.  They  had  em- 
ployed them  against  competing  towns  in  their  neighbour- 
hood regardless  of  the  fact  that  they  belonged  to  the 
same  territory.  As  early  as  1450  Frederick  II.  com- 
plained that,  in  contempt  of  his  authority,  the  men  of 
Spandau  demanded  Niederlage'^  from  the  burghers  of 
Cologne  and  Berlin.^  The  staple  privileges  of  Spandau, 
as  well  as  those  of  Oderberg,  Landsberg,  Eberswald, 
Tangermlinde,  and  Brandenburg,  and  even  those  of 
Berlin  were,  by  1600,  evaded  or  abolished.  Oderberg,  in 
1634,  formally  surrendered  the  right  of  demanding  Nieder- 

1  [Deposit  of  goods  en  route.    See  supra,  p.  10.]    2  Riedel,  i.  11,  109. 


28 


THE  MERCANTILE  SYSTEM 


lage,  in  return  for  a  grant  by  the  elector  of  a  court  of  lower 
jurisdiction.^  These  were  all  signs  of  progress  in  the 
matter  of  internal  freedom  of  trade.  Only  the  right  of 
Niederlage  enjoyed  by  Frankfurt  survived;  and  this  was 
even  enlarged:  for,  as  its  rivals  were  Stettin  and  Breslau 
and  other  trading  towns  outside  the  country,  the  electoral 
authorities  thought  it  their  duty  to  support  it.'^ 

Although  in  this  matter  territorial  policy  treated  the 
greater  centres  of  trade  differently  from  the  smaller,  and 
regarded  their  interests  as,  in  a  measure,  the  interests  of 
the  whole  country,  in  other  directions  the  government 
of  the  prince  had  to  oppose  even  these  larger  towns  —  as 
in  the  matter  of  import  and  export,  prohibitive  regulations, 
and  the  like.  The  .greater  and  more  important  the  town 
might  be,  the  less  possible  was  it  to  allow  it  to  have  an 
independent  policy  in  these  respects. 

Though  the  efforts  of  Joachim  I.  to  secure  freer  passage 
into  the  houses  of  one  town  of  the  beer  made  in  another 
had  little  success ;  though  the  burghers  of  Berlin,  even  in 
the  first  half  of  the  eighteenth  century,  desperately  re- 
sisted any  further  allowance  of  the  competition  of 
Bernau;  though  the  government  were  unable  to  obtain 
equal  rights  in  fairs  for  all  the  traders  and  craftsmen  of 
other  Brandenburg  towns ;  nevertheless,  it  was  quite  dis- 
tinctly recognised,  even  in  the  sixteenth  century,  that  the 
decision  whether  grain,  wool,  woolfells,  and  other  wares 
could  be  imported  or  exported  belonged  to  the  electoral 
government.    In  the  neighbouring  territories,  on  the  con- 

1  Riedel,  i.  12,  380. 

2  See  on  this  point  my  remarks  in  the  Zeitschr.f.preuss.  Gesch.  xix.  207-221. 


AND  ITS  HISTORICAL  SIGNIFICANCE,  29 


trary,  especially  in  Pomerania  and  the  archbishopric  of 
Magdeburg,  we  see  the  governments  waging  a  long  contest 
over  the  question  whether  the  chief  towns,  Stettin  and 
Magdeburg,  or  the  government  of  the  country,  or  both 
together,  had  the  right  to  prohibit  trade  in  corn.  Such  a 
prohibition  was  issued  by  the  town  of  Brunswick  in  the 
sixteenth  century  quite  independently,  and,  indeed,  very 
frequently. 

In  Pomerania  the  struggle  was  ended  in  1534-5  by 
arbitration :  if  the  Stettin  council  wished  to  forbid  export 
they  must  do  so  before  Shrove  Tuesday;  the  Duke  retained 
the  right  both  of  suspending  the  prohibition  altogether  and 
of  allowing  exceptions.^  In  the  archbishopric  of  Magde- 
burg we  find,  in  the  time  of  the  Elector  Albert,  that  some- 
times the  town  requested  the  government,  and  sometimes 
the  government  requested  the  town,  to  forbid  export,  and 
that  there  was  an  attempt  to  arrive  at  joint  action  by  joint  de- 
liberation; yet,  as  early  as  1538,  the  archiepiscopal  governor 
{Statthalter)  after  a  bad  harvest  imposed  a  duty  of  a  quarter 
of  a  gulden  per  wispel  on  the  export  of  corn  to  last  until 
next  Midsummer's  Day,  so  as  to  keep  a  sufficient  supply  in 
the  country  and  yet  "not  altogether  prevent  the  peasant 
from  making  a  livelihood."  Under  the  succeeding  Bran- 
denburg "administrators"  of  the  archbishopric,  the  right 
of  the  government  to  prohibit  export  in  times  of  scarcity 
was  as  undoubted  as  in  most  of  their  other  territories.^ 

In  Brandenburg  the  following  rules  were  established 
during  the  course  of  the  sixteenth  century.  In  winter, 
from  Martinmas  (Nov.  11)  to  the  Feast  of  the  Purification 

1  Thiede,  Chronik  der  Stadt  Stettin,  464.       2  Magdeburg  Archives. 


30 


THE  MERCANTILE  SYSTEM 


(Feb.  2)  no  exportation  should  take  place;  Scheplitz  con- 
nects this  with  the  cessation  of  navigation  during  the 
winter,  the  universal  custom  in  earlier  times.  Moreover,  1 
the  peasants  were  never  to  export;  only  the  squire  J 
(knights),  the  prelates,  and  the  towns.  In  time  ol 
dearth  the  Elector  had  the  right  of  embargo;  but  excep- 
tions were  allowed,  as,  for  instance,  to  the  towns  of  See- 
hausen,  Werben,  and  Osterberg  in  the  Old  Mark  (1536), 
both  on  account  of  their  position  on  the  frontier  as  well 
as  because  they  had  paid  a  considerable  sum  for  the 
privilege;  the  Margrave  John  granted  to  the  Frankfurters, 
in  1549,  a  similar  privilege  with  regard  to  his  appanage, 
the  New  Mark.  The  through  transport  of  corn  not  pro- 
duced in  the  Mark  was  allowed  at  any  time  upon  the 
production  of  certificates  of  origin;  and  the  Frankfurters 
were  permitted  at  any  time  to  export  barley  in  the  form 
of  malt,  even  if  it  came  from  the  country  itself.^ 

While  thus  corn-exporting  territories,  like  Pomerania, 
Magdeburg  and  Brandenburg,  had  constant  recourse  to 
prohibitions  of  export,  though  they  were  temporary  only, 
these  prohibitions  rested  on  the  idea  of  the  territorial  har- 
monising of  production  and  consumption;  and,  when  the 
needs  were  different,  recourse  was  had  without  hesitation 
to  an  even  more  stringent  and,  in  the  last  resort,  perma- 
nent prohibition;  as  Pohlmann  has  described  in  the  case 
of  Florence,^  and  Miaskowski  for  the  Swiss  cantons.^  The 

1  Mylius,  Riedel,  and  Scheplitz,  Consuetudlnes  Electoratus  et  MarchicB 
Brand.  (1617),  have  a  pretty  extensive  collection  of  material  on  this  subject. 

2  Die  Wirthschaftspolitik  der  Florentiner  Renaissance  (1878) . 

3  Die  Agrar-,  Alp  en-  und  For stv  erf  as  sung  der  deutschen  Schweiz  in 
ihrer  geschichtlichen  Entwicklung  (1878). 


AND  ITS  HISTORICAL  SIGNIFICANCE,  31 


Netherlands  prohibited  the  export  not  only  of  native 
horses,  weapons,  and  war-material,  but  also  of  native  corn, 
gold,  silver,  quicksilver,  copper,  and  brass.  In  Branden- 
burg, also,  hops  were  much  more  often  compulsorily  kept 
back  than  corn.  Everywhere  the  prohibition  of  the  export 
of  leather  and  cattle  played  a  great  part.  It  was  always 
the  same  conception  that  was  involved:  the  resources  of 
the  land  were  thought  of  as  a  whole,  which  ought,  first  of 
all,  to  serve  the  needs  of  the  country;  they  ought  not  to 
enrich  a  few  individuals,  but  serve  the  home  producer  and 
the  home  consumer  at  a  fair  price.  The  regulations 
hitherto  employed  for  this  end  by  the  towns  were  now 
transferred  to  the  territories.  As  hitherto  the  town  had 
laid  an  embargo,  so  now  the  territory:  as  the  town  had, 
at  times,  prohibited  the  import  of  foreign  beer  and 
wine  and  manufactured  articles,  so  now  the  territory: 
as  the  town  had  hitherto  maintained  an  elaborate  system 
of  differential  tolls,  so  now  the  districts  and  territories 
set  out  upon  a  similar  course.  Berne  threatened  its 
Oberland  (or  subject  territory)  with  an  embargo  on  corn 
and  salt,  if  it  did  not  bring  all  its  butter  to  Berne.  As 
Nuremberg  forced  to  its  own  market  all  the  cattle  that 
came  within  a  circuit  of  ten  miles  ;^  as  Ulm  did  not  allow 
a  single  head  of  cattle  fed  on  the  common  pasture  to  leave 
its  territory;  ^  so  Florence  secured  for  itself  all  the  cattle 
sold  from  the  subject  districts  without  permitting  their 
return,  and  exacted  sureties  from  the  owners  of  the  great 
flocks  driven  to  the  Maremme  that  they  would  bring  them 

1  Baader,  Niirnberger  PoUzeiverordnungen,  201, 

2  Jager,  Schwab.  Stddtewesen,  728. 


32  THE  MERCANTILE  SYSTEM  , 

1 

back  within  the  state  boundaries  a  third  larger.    In  the 
duchy  of  Milan,  an  official  permission  was  necessary  even 
for  the  transport  of  grain  from  place  to  place,  so  that  j 
the  country  might  remain  sure  of  its  food. 

This  transition  from  municipal  to  territorial  policy  in 
Germany  is  most  clearly  shewn  in  the  matter  of  the  raw 
material  for  its  most  important  industry,  to  wit  wool. 
When  the  crisis  began  for  the  German  cloth-manufacture, 
—  as  foreign  competition  became  more  and  more  serious, 
as  the  local  industry,  which  was  carried  on  everywhere, 
began  to  decay  and  its  place  to  be  taken  by  a  more  con- 
centrated business  confined  to  places  peculiarly  well ' 
suited  for  cloth-making  (1450-1550),  — the  towns  tried  at 
first  to  render  the  export  of  wool  difficult  or  to  regulate 
it  for  the  benefit  of  the  home  industry.^  The  impractica- 
bility of  such  a  local  policy  soon  shewed  itself.  There- 
upon the  Empire  itself  made  a  fruitless  attempt  to  prohibit 
the  export  of  wool  (1548-1559);  but  soon  abandoned  the 
matter  to  the  larger  territories.  Wiirtemberg,  Bavaria, 
Hesse,  Saxony,  and  Brandenburg  then  tried  by  repeated 
laws  and  ordinances  to  hinder  export  for  the  benefit  of 
the  home  producer;  and  not  only  that, —  even  the  importa- 
tion of  cloth  was  partially  forbidden.  The  wool  trade  and 
soon  afterwards  the  cloth  industry  of  the  whole  country  : 
received  a  territorial  organisation.  We  have  no  space  ] 
here  to  give  an  account  of  the  efforts  of  Brandenburg  in  i 
this  direction;  they  begin  as  early  as  1415  and  1456,  and 
end  with  the  famous  wool  laws  of  1572-1611,  which,  how- 
ever, disclose  to  us  only  a  part  of  the  manifold  struggles  and 

1  Schmoller,  Die  Strassburger  Tucker-  und  Weberzunft  (1879),  506.  ' 


AND  ITS  HISTORICAL  SIGNIFICANCE,  33 


'  endeavours  with  regard  to  the  matter  which  marked  the 

i! 

ijperiod.^ 

j  Behind  all  the  efforts  I  have  described  lay  the  conception 
that  the  territorial  trade,  the  territorial  industry,  and  the 
territorial  market  formed  a  united  whole.^  All  the  regula- 
tions already  mentioned,  however,  did  but  touch,  one 
after  the  other,  particular  groups  of  people.  The  cur- 
rency system,  on  the  other  hand,  touched  the  whole  body 
of  the  prince's  subjects.  The  transition  from  a  munic- 
ipal to  a  territorial  currency  in  Germany  likewise  belongs 
jto  the  period  from  the  fifteenth  to  the  seventeenth  cen- 
tury, and  is  one  of  the  most  important,  and  yet  one  of 
the  most  obscure,  parts  of  the  constitutional  and  eco- 
nomic history  of  the  territories.  The  course  of  the  de- 
velopment, as  it  appears  to  me,  after  the  extensive,  but 
by  no  means  complete,  study  I  have  made  of  it,  I  may 
briefly  sketch  as  follows :  — - 

With  the  imperial  right  of  currency  and  a  uniform 
imperial  standard  for  its  theoretic  bases,  there  had,  as  a 
matter  of  fact,  grown  up  in  the  course  of  the  twelfth, 
thirteenth,  and  fourteenth  centuries  a  system  of  altogether 
local  currencies.  These,  however,  were  not  put  into  a 
decent  condition,  either  from  the  technical,  the  financial, 
or  the  economic  points  of  view,  until  they  passed  pretty 

1  The  state  archives  of  Berlin  contain  a  rich  material  which  I  have 
already  worked-up  into  a  connected  statement. 

2  The  idea  that  territorial  connection  involved  free  traffic  within  the  land 
was  present  as  early  as  1451 ;  as  we  may  see  from  a  document  of  that  year, 
given  in  Riedel  i.  20,  206,  which  sought  to  regulate  the  future  addition  of 
Beeskow  and  Storkow  to  Brandenburg  mainly  from  an  economic  point  of 
view,  and  in  the  direction  of  freedom  of  trade  between  the  electorate  and 
these  "  circles." 

D 


34 


THE  MERCANTILE  SYSTEM 


generally  out  of  the  hands  of  the  princes,  and  under  the 
authority  or  control  of  the  towns.  It  was  the  towns  anc 
their  markets  that  needed  most  urgently  a  well  regulatec 
and  stable  currency;  they  it  was  who  got  rid  of  the  cease 
less  depreciation  that  had  hitherto  been  common;  to  then 
was  due  "the  perpetual  penny"  (der  ewige  Pfennig)  — ii 
Brandenburg,  among  other  places,  for  there,  also,  the  cur 
rency  (by  the  help  of  Bismarck's  ancestors)  passed  over  t( 
the  towns.  It  was  the  town  money,  that  of  Liibeck,  Bruns 
wick,  Erfurt,  Nuremberg,  Halle,  and  other  places,  that  was 
for  the  time,  the  most  satisfactory.  The  towns  were  ricl 
enough  to  coin  abundantly,  and  were  intelligent  enough  t< 
understand  the  evil  results  of  a  badly  managed  currency 
and  the  harm  that  flows  from  fiscal  trickery. 

But  this  whole  movement  could  last  only  as  long  as  traffi 
was  mainly  local,  and  also  scanty.  "The  penny  is  on! 
taken  where  it  is  struck  "  {der  Heller  gilt  nur^  wo  er  gt 
schlagen  ist)  was  a  legal  proverb  in  the  Middle  Ages;  aj 
strange  coins,  even  those  from  the  nearest  town,  had  to  b| 
taken  to  the  exchanger  or  Hausgenosse,  ^  who  sat  at  hi 
table  in  front  of  the  mint,  and  there  exchanged  them  fd 
new  coins  of  the  place.  But  this  rule  became  hardly  pra^ 
ticable  in  the  fourteenth  century  and  quite  impracticable  ii 
the  fifteenth.  Every  little  currency-area  was  flooded  wit" 
cheaper  pennies  by  its  neighbours,  whenever  they  coulj 

!, 

"  ii 

1  [The  ewige  Pfennig  was  a  currency  which  the  towns  that  issued  ; 
solemnly  undertook  never  to  depreciate.] 

2  [Hausgenosse,  literally  "  house-companion,"  was  the  designation 
moneyers  or  minters  in  several  German  cities,  and  it  is  variously  explainei 
by  some  as  going  back  to  the  time  when  the  mint  was  in  the  house  of  tl 
prince.  In  the  later  Middle  Ages  their  work  was  chiefly  that  of  exchangers 


AND  ITS  HISTORICAL  SIGNIFICANCE, 


35 


manage  it.  The  disadvantages  of  localisation  began  to 
surpass  the  advantages  of  a  municipal  currency;  even  the 
towns  themselves  entered  upon  a  disgraceful  competition  as 
.to  which  should  debase  the  coinage  most.  Then  followed 
iQumberless  currency  treaties  between  various  towns  and 
princes.  Foreign  coins  of  better  quality,  like  the  Italian 
and  Hungarian  gold  gulden  and  the  Bohemian  groschen, 
[forced  their  way  in,  and  came  to  be  treated  as  a  kind  of 
pniversal  currency  as  contrasted  with  the  changing  and 
asually  bad  small  coins  of  each  particular  place. 

The  German  kings  and  emperors  did  indeed  seek  to 
:reate  some  sort  of  uniformity  of  currency  —  at  any  rate 
m  the  southwest:  the  gold  gulden  was  regarded  as  an 
imperial  coin;  the  imperial  currency  ordinance  of  15 21 
\vas  a  plan  pressed  upon  the  Council  of  Regency  {Reichs- 
regiment)  ^  by  the  mint  officials  of  western  Germany. 
But  in  spite  of  later  imperial  ordinances,  and  the  attempt 
to  exercise  control  over  the  currency  of  the  several  Estates 
by  means  of  the  Circles  {Kreise),'^  the  empire  was  unable 
jto  bring  about  a  real  unity.    Here,  also,  the  victory  be- 

j  1  [As  Mrs.  Austin  has  remarked,  "  The  translation  commonly  in  use  for 
\^eichsregiment  (Council  of  Regency)  does  not  convey  any  definite  or  correct 
idea  to  the  mind  of  the  reader,  nor  does  any  better  suggest  itself."  It  was  the 
mpreme  executive  council  of  the  empire,  established,  and,  for  a  time,  kept 
n  existence,  by  the  party  that  sought  to  strengthen  the  federal  constitution 
Df  Germany.  For  its  establishment  in  1500  and  supersession  in  1502,  its 
-e-establishment  in  1521,  its  difficulties  with  the  knights  and  cities,  and  its 
practical  downfall  in  1524,  see  Mrs.  Austin's  trans,  of  L.  Ranke's  History  of 
^■he  Reformation  in  Gerinany,  i.  152-159,  503-506 ;  ii.  bk.  iii.  chs.  2  and  4.] 

2  [The  division  of  the  empire  into  provinces,  known  as  Kreise  or  Circles, 
dated  from  1500.  There  were  six  of  these  at  first,  and  the  hereditary  lands 
3f  the  Austrian  house  and  the  electorates  were  excluded.  In  1512  these  were 
ill  brought  into  the  system  as  four  new  circles.    Their  function  was  origi- 


36 


THE  MERCANTILE  SYSTEM 


longed  to  the  territories.  The  powerful  and  energetic 
territorial  governments  were  able,  step  by  step,  to  deprive 
the  towns  of  their  rights  of  coinage,  to  make  the  mint- 
masters  once  more  the  officials  of  the  prince  of  the  land, 
and  to  introduce  a  uniform  system  for  at  least  a  few 
hundred  square  miles.  Upon  the  extent  to  which  they 
succeeded  depended  in  large  measure  the  trade  and  pros- 
perity of  the  several  lands  in  the  sixteenth  century.  Those 
princes  who  happened  to  possess  rich  silver  mines,  like; 
the  Saxon  rulers,  had  the  easiest  task;  and  they  naturally 
showed  most  antipathy  towards  the  attempts  to  bring 
about  a  uniform  currency  for  the  empire  or  the  several 
circles.  The  Hohenzollern  princes  seem  to  have  resumed , 
the  right  of  coinage,  and  to  have  coined  for  themselves  I 
in  the  Mark  of  Brandenburg,  at  any  rate  from  1480  or 
1490  onward;  while  in  the  lands  of  the  Teutonic  Order 
the  towns  had  never  completely  and  permanently  secured 
the  right.  It  is  mentioned  as  an  exception  in  the  case  of 
Berlin,  that  it  struck  some  small  coins  on  its  own  account 
from  1540  to  1542,  and  again,  but  for  the  last  time,  in 
162 1.  In  Pomerania,  Bogeslaw  disputed  the  privilege  of 
Stralsund  in  1504;  and  towards  1560  the  town  had  lost  the 
right.  Stettin,  in  .1530,  had  to  recognise  that,  even  in 
the  time  of  the  father  of  the  duke  then  ruling,  the  princejl 
had  refused,  for  weighty  reasons,  to  allow  the  town  to  havef 
its  own  currency,  |' 

nally  only  to  facilitate  elections  to  the  Reichsregiment  and  Kammergerichi 
(Imperial  Chamber);  but  various  administrative  and  executive  duties  were; 
added  later.  The  division  into  circles  remained  in  its  essential  features 
down  to  1803.  See  Ranke,  History  of  the  Reformation,  i.  153-154,  2.iAr2.\^ 
and  elsewhere.] 


AND  ITS  HISTORICAL  SIGNIFICANCE.  37 

The  decisive  thing  was  the  exercise  of  the  princely 
right  of  coinage  by  the  territorial  governments  themselves. 
[Mere  ordinances, —  such  as  those  set  forth  as  early  as  the 
reign  of  Frederick  II.  of  Brandenburg,  that  Rhenish  gold 
ligulden  were  to  be  taken  at  such  and  such  a  rate,  but 
Ithat,  as  a  rule,  people  were  to  reckon  in  Bohemian 
Igroschen, — were  useless.  The  essential  matter  was  to  re- 
jplace  municipal  and  foreign  coins  by  those  of  the  prince 
jin  sufficient  quantity.  Here,  also,  it  appears  to  have  been 
lijoachim  I.  who  opened  for  Brandenburg  the  way  to  an 
energetic  policy  in  the  matter.  He  not  only  had  gold 
igulden  struck  in  Berlin,  but  also  silver  coins,  both  heavy 
|and  light,  at  seven  different  mints.  Negotiations  with 
Saxony  for  a  uniform  currency  tailed  in  their  purpose. 
The  standard  in  the  Mark  was  lighter.  The  Brandenburg 
currency  adict  of  1556  did,  indeed,  create  a  new  coinage 
pith  new  subdivisions,  which  harmonised  with  the  im- 
perial currency.  But  the  idea  of  a  separate  territorial 
:urrency  system  was  still  dominant  and  so  remained. 
3nly  certain  foreign  coins  were  admitted,  and  these  only 
It  the  value  set  upon  them  by  the  territorial  authority. 
The  other  territorial  and  town  coins  were  forbidden.  It 
vas  from  time  to  time  strictly  ordered  that  the  coins  that 
lad  been  recently  forbidden  should  be  disused  at  a  certain 
jiate,  and  exchanged  at  the  mint.  The  prohibition  of 
jxport  plays  a  smaller  part  in  Brandenburg  than  in  Saxony; 
)robably  because,  as  the  coins  were  lighter,  there  was 
ess  temptation  to  send  them  out  of  the  land.  But  penal- 
ies  were  frequently  (1590,  1598)  threatened  against  Jews 
md  Scots  who  bought  up  the  old  silver  and  exported  it. 


38 


THE  MERCANTILE  SYSTEM 


The  earlier  universal  practice  of  the  towns,  with  regard 
to  the  prohibition  of  foreign  currency,  or  the  exportation 
of  their  own,  the  right  of  preempting  old  gold  and  silver, 
and  similar  regulations,  was  now,  naturally  enough,  copied 
by  the  territorial  governments.  Whether  and  how  far  they 
succeeded  with  all  their  penal  mandates,  depended,  of 
course,  on  the  movements  of  trade,  and  the  relation  of  the 
nominal  value  of  the  several  coins  to  the  estimate  placed 
upon  them  in  neighbouring  lands  and  in  foreign  trade.  But 
undoubtedly  it  was  the  prevalent  idea,  with  rulers  and 
ruled  alike,  that  it  was  the  duty  of  the  government  to 
provide  the  land  with  a  good  and  uniform  coinage,  and  to 
close  it  against  the  outside  world  in  this  respect,  even  if 
not  in  the  matter  of  trade. 

This  currency  system  for  a  whole  principality  was, 
then,  the  institution  which,  —  together  with  the  financial 
system  for  a  whole  principality  to  be  next  described,— 
most  distinctly  drew  the  circle  which  bound  the  territory 
into  one  economic  body.^ 

As  to  the  finances,  here  the  participation  of  the  Estates 
in  their  control  tended  towards  centralisation,  in  even 
greater  measure  than  the  activity  of  the  princes  and  their 

1  Besides  the  book  of  Piickert  on  the  currency  of  Saxony  from  1518  to 
1545,  there  is  really  no  useful  literature.  B.  Kohne,  Das  Munzwesen  de? 
Stadt  Berlin,  in  Fidicin,  Histor,  diplom.  Beitrage  zur  Geschichte  der  Stadi 
Berlin,  iii,  429  et  seq.,  is  as  unsatisfactory  as  Leitzmann's  Wegweiser  auf 
dem  Gebiete  der  deutschen  Munzkunde  (1869).  Besides  these.  Grote,  Mone 
Hegel,  and  others  give  us  a  good  deal  of  information,  but  nothing  that  seizes 
the  economic  significance  of  the  currency  of  the  14th  to  i6th  centuries  as  £ 
municipal,  a  territorial,  and  an  imperial  institution.  On  Brandenburg  muct 
has  been  published,  by  Mylius,  Riedel,  and  Raumer,  but  not  all,  by  an^ 
means,  that  is  contained  in  the  Berlin  archives. 


AND  ITS  HISTORICAL  SIGNIFICANCE.  39 

officials.  Yet  even  this  initiative  of  the  court  is  not  to  be 
undervalued.    Where  thrifty  princes,  carrying  on  a  pater- 

:  nal  rule,  duly  regulated  and  extended  the  official  body  (as 
in  Saxony  the  Elector  Augustus,  in  Brandenburg  the  Mar- 

I  grave  John),  this  activity  was  of  no  slight  importance  for 

j  the  welfare  of  the  land,  and  the  consolidation  of  its 
economic  forces.  Many  of  the  princes  of  the  time  were 
interested  in  technical  improvements  and  inventions,  had 
their  own  laboratories  and  alchemists,  sought  to  establish 
mines,  and  erected  mills,  glassworks,  and  saltworks;  here 
and  there  magnificent  castles  and  fortresses  were  built  with 
the  aid  of  Italian  architects  and  foreign  artists  and  arti- 
sans. This  put  the  household  of  the  prince  and  the  service 
of  the  prince,  with  its  increasing  number  of  officials,  in  the 
centre  of  the  economic  life  of  the  territory  more  distinctly 
that  it  had  ever  been  before,  and  left  behind  a  distinct 
influence  for  generations.  Thus  the  Margrave  Hans,  in 
his  will,  prides  himself  not  unjustly  upon  the  fact  that 
during  his  reign  both  the  country  and  the  people  had 
waxed  great,  and  that  they  had  never  stood  so  high  before 
in  revenue  and  resources. 

As  to  territorial  taxes  and  their  development,  so  little  of 

*  the  material  for  the  history  of  taxation  in  the  several  states 
has  been  worked  through,  up  to  the  present,  that  a  clear 
and  complete  survey  is  still  hardly  possible.^  Neverthe- 
less, this  much  is  already  clear  that  the  construction  of 
municipal  systems  of  taxation,  which  belongs  to  the  period 

1  For  Brandenburg,  cf.  Schmoller,  Die  Epochen  der  preussischen  Finanz- 
poUtik  in  the  Jahrb.  f.  Gesetzg.  N.  F.  i.  33-114.  A  history  of  the  direct 
taxes  of  Bavaria  up  to  1800,  by  L.  Hoffman,  appears  in  my  Forschungen^  iv.  5. 


40 


THE  MERCANTILE  SYSTEM 


from  the  thirteenth  to  the  fifteenth  century,  was  followed 
by  a  period  wherein  territorial  systems  were  constructed; 
that  the  protracted  struggles  by  which  a  system  of  direct 
and  indirect  territorial  taxes  was  created  belong  chiefly 
to  the  period  from  the  fifteenth  to  the  seventeenth  cen- 
tury; that  these  new  systems  in  part  abolished,  in  part 
profoundly  modified,  the  old  municipal  systems;  and, 
finally,  that  they  created  links  and  bonds  of  union  between 
town  and  country,  between  circle  and  circle,  and  between 
the  various  districts  of  the  same  state,  such  as  fundamen- 
tally affected  economic  life.  To  begin  with,  it  could  not 
fail  to  exert  a  very  great  influence,  that  the  Estates  met 
together  in  periodical  assemblies,  that  they  became  accus- 
tomed, in  granting  the  taxes,  to  look  upon  the  country 
and  its  well-being  as  a  whole,  and  to  distribute,  alter,  or 
create  taxes  with  that  in  their  minds.  The  same  must 
be  said  of  the  inspection  of  the  whole  land  by  commis- 
sioners of  the  Estates,  for  the  purpose  of  preparing  an 
assessment  which  should  deal  with  property  everywhere  on 
common  principles.  And,  finally,  it  is  significant  that  in 
the  great  struggle  for  freedom  of  taxation,  regard  was 
paid  to  all  other  contributions  by  the  privileged  classes, 
in  person  or  in  purse,  to  the  needs  of  the  country.  In 
no  other  field  of  political  life  was  the  principle  so  often 
invoked  that  the  subjects  were  to  regard  themselves  as 
membra  unius  capitis,  as  in  relation  to  taxation  and  to  the 
other  contributions  demanded  from  subjects  in  natura. 

In  the  towns  the  development  would  seem  to  have  followed 
some  such  course  as  this :  that  the  thirteenth  century  was 
mainly  marked  by  the  devising  of  the  direct  property  tax; 


AND  ITS  HISTORICAL  SIGNIFICANCE,  41 


that  thereupon  in  the  beginning  of  the  fourteenth  cen- 
tury Umgelder^  and  other  indirect  taxes  came  to  the  front; 
once  more  to  be  rivalled,  during  the  course  of  the  four- 
teenth century,  by  the  increased  prominence  of  the  property 
tax.  Much  the  same,  I  cannot  help  thinking,  must  have 
been  the  line  of  territorial  development.  To  the  four- 
teenth and  fifteenth  centuries  belongs  the  struggle  for  the 
definite  establishment  of  the  Landbeden,^  the  Landschdsse,^ 
and  other  property  taxes,  based  on  yardlands  {Hufen)^ 
number  of  cattle,  houselots,  and  property  valuation. 
These  were  constantly  being  tried  in  a  rough-and-ready 
way  in  imitation  of  the  older  town  taxes,  without  any  great 
result.  Fixed  and  regular  contributions,  paid  annually 
but  of  very  small  amount,  appear  side  by  side  with  heavier 
subsidies  granted  every  two  or  three  years  or  so,  for  some 
particular  time  of  stress  or  war. 

To  the  century,  next,  from  1470  to  1570,  belongs  the 
attempt  (for  which  there  is  evidence  everywhere)  to  create 
a  system  of  indirect  taxes  for  the  territory;  and  this  neces- 
sarily led  to  a  conflict  with  the  indirect  taxes  of  the  towns 
and  the  trade  policy  based  upon  it.  The  prince's  monop- 
oly of  salt,  involving  as  it  did  a  shutting-up  of  the 
country  against  the  outside  world,  together  with  the  beer 

1  [The  Umgeld  (or  Umgelt,  Vngeld  or  Ungeli)  was  a  tax  on  the  con- 
sumption of  certain  commodities,  such  as  beer  and  corn,  which  played  an 
important  part  in  German  city  finance  throughout  the  Middle  Ages.] 

2  [The  term  Bede  or  Bete,  for  which  the  Latin  equivalents  WQve  precaria 
and  petilio,  points  to  the  original  character  of  the  tax  as  in  theory  a  more  or 
less  voluntary  contribution  of  the  subjects,  needing  to  be  specially  asked 
for  and  consented  to.] 

3  [Sckoss  is  possibly  connected  etymologically  with  the  English  scof,  in 
the  phrase  scot  and  lot.l 


42 


THE  MERCANTILE  SYSTEM 


tax,  the  excise  on  wine,  and  the  various  tolls  occupied 
the  foreground.  Of  the  changes  in  the  system  of  tolls, 
particularly  in  Brandenburg,  I  have  given  an  account  in 
another  place,  and  I  have  tried  to  shew  how  the  older 
system,  which  had  become  municipal  and  feudal,  gave  way 
entirely  before  the  new  territorial  system  during  the 
period  from  1470  to  1600.^  This  latter  did,  indeed, 
become  more  and  more  purely  fiscal  in  its  character,  espe- 
cially in  the  gloomy  years  1 600-1 640  ;  yet  it  continued 
in  some  measure  to  be  affected  by  economic  considera- 
tions. Of  equal  importance  for  Brandenburg  was  the 
introduction  of  the  beer  tax,  which  from  1549  constituted 
the  centre  round  which  revolved  the  whole  administration 
by  the  Estates  of  the  territorial  debt.  The  application  in 
all  places  of  the  same  rules  in  levying  it,  tended  to  bring 
about  everywhere  a  uniform  organisation  of  the  business, 
—  then  among  the  most  flourishing  and  important  of  town 
industries.  As  there  was  a  large  sale  of  Brandenburg  beer 
in  foreign  parts,  the  heavy  taxation  imposed  upon  it  ren- 
dered a  gentle  treatment  necessary  of  the  exporting  towns 
on  the  frontier:  as  early  as  the  years  1580-1620  there  was 
some  serious  discussion  as  to  the  consequences  of  the  beer 
tax  here  and  in  neighbouring  states,  and,  indeed,  of  the 
effect  of  such  territorial  taxes  in  general  upon  commercial 
and  industrial  prosperity.  The  administration  of  the  beer 
tax  fund  {Biergeldkasse)  by  the  Estates  grew  into  a  credit- 
system  enclosing  the  whole  land,  and  especially  the  funds 
of  the  several  towns,  within  its  network.  Whoever  hap- 
pened to  have  any  idle  cash  brought  it  to  the  district 

1  Zeitschrift  fur  preussische  Geschichte  und  Landeskunde,  xix.  198-207. 


AND  ITS  HISTORICAL  SIGNIFICANCE.  43 

authorities,  who  used  it  to  meet  the  never-ending  deficit; 
thousands  and  thousands  of  gulden  were  every  year  with- 
drawn and  paid  in  again.  The  debt  office  acted  as  a  bank 
for  the  whole  country,  just  as  the  town-chest  had  been 
for  the  town  in  earlier  times.  The  men  of  means  through- 
out the  land  were  so  closely  associated  with  this  central 
institution,  that  the  insufficiency  of  its  income  prepared 
the  way  for  a  frightful  bankruptcy.^ 

With  the  financial  and  economic  crisis  of  the  Thirty 
Years'  War  began  a  new  epoch  in  the  history  of  territorial 
taxation,  upon  which  we  need  not  here  enter.  In  Bran- 
denburg and  some  other  states,  it  is  marked  by  a  com- 
plete cessation  of  attempts  to  increase  the  beer  tax, 
and  by  a  sustained  effort  for  some  fifty  or  sixty  years  to 
develop  the  direct  taxes,  the  subsidies,  and  the  assessment 
on  which  they  rested.  During  the  period  1670  to  1700, 
however,  as  prosperity  once  more  began  to  return,  the 
tendency  to  develop  the  indirect  taxes,  especially  the 
excise,  again  became  predominant. 

Here  let  us  pause.  Our  purpose  was  to  shew  by  a  particu- 
lar example,  that  of  Brandenburg,  that,  during  the  course  of 
the  period  from  the  fifteenth  to  the  seventeenth  century, 
the  creation  of  the  German  territorial  state  was  not  merely 
a  political  but  also  an  economic  necessity.  But  the  same 
results  were  brought  about  elsewhere.  The  several  states  of 
Holland,  the  French  provinces,  the  Italian  city-states,  are 

1  Isaacsohn,  Die  Finanzen  yoachims  II  und  das  stdndische  Kreditwerk,'m. 
Zeitschr.f,  preuss.  Gesch,  xiv.  455.  I  have  myself  brought  together  a  mass 
of  material  concerning  the  brewing  business  and  its  taxation. 


44 


THE  MERCANTILE  SYSTEM 


all  analogous  phenomena.  We  have  to  do  with  a  great 
historical  process,  by  which  local  sentiment  and  tradition 
were  strengthened,  the  social  and  economic  forces  of 
the  whole  territory  consolidated,  important  legal  and 
economic  institutions  created  ;  by  which,  further,  the 
forces  and  institutions  thus  united  were  led  to  a  battle 
of  competition  with  other  territories,  involving  numerous 
shiftings  of  toll,  confiscations  of  goods  and  ships,  embar- 
goes and  staple-fights,  prohibitions  of  importation  and  ex- 
portation and  the  like  ;  while,  within  the  country  itself, 
old  antagonisms  softened  and  trade  became  more  free. 

To  so  powerful  and  self-contained  a  structure  and  so 
independent  and  individual  a  policy  as  the  town  had 
reached  in  an  earlier  age,  and  the  modern  state  has  reached 
since,  the  German  territory  scarcely  anywhere  attained. 
Naturally,  territorial  patriotism  was  by  no  means  so  strong 
as  municipal  before  or  national  since;  economic  condi- 
tions, the  methods  of  production  and  of  transport  and  the 
division  of  labour  in  the  fifteenth  and  sixteenth  centuries 
did  not  necessitate  so  high  a  degree  of  unity  in  economic 
organisation  as  before  in  the  town  and  afterwards  in  the 
national  state.  The  imperial  constitution  of  Germany, 
imperfect  as  it  was,  was  still  strong  enough  to  hold 
the  territories  back  in  many  ways  from  an  independent 
economic  policy.  We  have  already  remarked  how  greatly, 
in  the  case  of  most  territories,  their  geographical  position 
and  boundaries  hampered  them  in  their  advance  towards 
a  position  like  that  reached  by  some  Italian  and  Dutch 
districts.  Everywhere  in  southwestern  Germany,  and  to 
a  great  extent  also  in  central  Germany,  the  territories  of 


AND  ITS  HISTORICAL  SIGNIFICANCE. 


45 


the  several  Estates,  the  dominions  of  the  counts,  of  the 
imperial  cities,  of  the  abbots,  of  the  bishops,  and  of  the 
knights  were  so  small,  that,  if  for  no  other  cause,  they 
were  bound  to  remain  in  the  stage  of  a  natural  economy,  ^ 
and  a  merely  local  policy.    In  the  northeast  of  Germany 
there  were,  indeed,  larger  united  areas;  but  in  density  of 
population,  supply  of  capital,  state  of  trade  and  transporta- 
tion, mechanism  of  administration  and  general  cultivation, 
they  were,  even  in  1600,  inferior  to  western  and  central 
Germany;  so  that  in  their  economic  institutions  they 
remained  far  behind  the  greater  states  of  the  southwest; 
partly  also,  of  course,  in  consequence  of  want  of  skill  on 
the  part  of  their  rulers  and  other  fortuitous  circumstances. 
Not  without  reason  did  the  Brandenburg  ordinance  con- 
cerning the  privy  council  complain,  in  1604,  that,  in  spite 
of  all  its  favourable  conditions  and  all  its  navigable  streams, 
the  country  was  coming  to  be  less  frequented  by  foreign 
merchants,  nay,  even  abandoned  by  them;  not  without 
reason  did  it  attribute  this  state  of  things  to  the  want  of 
good  "Polizei";  i.e.  to  an  executive  that  was  too  weak, 
and  that  had  too  little  internal  and  external  unity.  And 
things  became  even  worse  in  the  course  of  the  great  war, 
which  not  only  annihilated  population  and  capital,  but,  — 
what  was  harder  still,- buried  in  ruin  the  beginnings  of  a 
rational  economic  policy  for  the  territory,  both  in  Bran- 
denburg and  elsewhere;  weakened  for  many  long  years  the 
1  PA  "  natural  economy  "  as  distinguished  from  a  "  money  economy,"  - 
a  distinction  first  dwelt  upon  by  the  economist.  B. 

condition  of  things  in  which  the  distribution  of  --^.^^  J^^f  ^•^^.I''^";, 
the  intervention  of  money,  as  e.g.  by  payments  m  kmd.  Cf.  Ashley.  Eco 
nomic  History,  i.  pt.  i.  43.] 


46 


THE  MERCANTILE  SYSTEM 


sense  of  the  necessity  of  such  a  policy;  and  everywhere 
strengthened  local  privilege  and  individual  self-will. 
/     Yet  this  very  time,  —  the  second  half  of  the  sixteenth 
i   century  and  the  seventeenth  century,  —  was  an  epoch  which 
\  gave  every  inducement  for  an  economic  transformation. 
The  way  was  already  clear,  out  of  the  narrow  circle  of  the 
small  territory  into  th,e  larger  union  of  forces  possible  only 
in  the  great  state.    An  immeasurable  horizon  had  been 
opened  to  the  world's  trade  in  India  and  America;  the 
possession  of  spice  colonies,  and  of  the  new  gold  and  sil- 
ver countries,  promised  measureless  riches  to  those  states 
that  understood  how  to  seize  their  share  of  the  booty.  But 
it  was  clear  that  for  such  purposes  it  was  necessary  to  have 
powerful  fleets,  and  either  great  trading  companies  or 
equivalent  state  organisations.    At  home,  also,  economic 
changes,  of  no  less  importance,  took  place.    The  new  postal 
services  created  an  altogether  new  system  of  communica- 
tion.   Bills  of  exchange,  and  the  large  exchange  operations 
at  certain  fairs,  together  with  the  banks  which  were  now 
making  their  appearance,  produced  an  enormous  and  far- 
reaching  machinery  of  credit.    The  rise  of  the  press  gave 
birth  to  a  new  kind  of  public  opinion,  and  to  a  crowd  of 
newspapers  which  cooperated  with  the  postal  service  in 
transforming  the  means  of  communication.  Moreover, 
there  now  took  place  in  the  several  countries  a  geographi-  - 
cal  division  of  labour,  which  broke  up  the  old  many-sided- 
ness of  town  industry;  here  the  woollen  manufacture  was 
grouping  itself  in  certain  neighbourhoods  and  around 
certain  towns,  there  the  linen  manufacture;  here  the 
tanning  trade,  there  the  hardware  trade.    The  old  handi- 


AND  ITS  HISTORICAL  SIGNIFICANCE, 


47 


craft  {Handwerk)  began  to  convert  itself  into  a  domestic 
industry  {Hausindustriey  \  the  old  staple  trade,  carried  on 
in  person  by  the  travelling  merchants,  began  to  assume  its 
modern  shape  with  agents,  commission  dealers,  and 
speculation. 

These  forces  all  converging  impelled  society  to  some  large 
economic  reorganisation  on  a  broader  basis,  and  pointed 
to  the  creation  of  national  states  with  a  corresponding 
policy.  Germany  itself  had  made  a  brilliant  start  in  many 
respects,  —  in  the  matter  of  traffic,  of  manufacturing  proc- 
esses and  division  of  labour,  and  even  in  its  foreign 
trade;  but  neither  its  imperial  or  Hanseatic  cities,  nor, 
as  a  rule,  its  territorial  states,  were  capable  of  making 
the  most  of  it.  Still  less  did  the  imperial  power  know 
how  to  set  about  the  great  task  of  the  economic  consolida- 
tion of  the  empire  which  was  now  so  urgently  called  for : 
in  the  sixteenth  century  it  was  exclusively  occupied  in  the 
maintenance  of  the  religious  peace;  in  the  seventeenth 
century  it  was  altogether  subservient  to  the  Austrian  and 
Catholic  policy  of  the  Hapsburg  dynasty.  England's 
cloths  were  flooding  the  German  market.  Sweden  and 
Denmark  were  organising  themselves  as  maritime  and 
commercial  powers :  Spain,  Portugal,  and  Holland  divided 
the  colonial  trade  between  themselves.    Everywhere,  save 

'^\Haus Industrie  and  Domestic  System  are  terms  which  came  to  be  em- 
ployed in  Germany  and  England  to  designate  the  industrial  conditions  de- 
stroyed or  threatened  by  the  Factory  Systein,  to  which  they  presented  the 
contrast  that  the  work  was  done  in  the  workman's  home.  But  they  are  now 
used  by  economic*historians  as  more  or  less  technical  terms  to  describe  a 
stage  in  industrial  development  marked  by  other  and  even  more  important 
traits.  For  an  account  of  these,  following  the  current  German  classification, 
see  Ashley,  Economic  History,  i.  pt.  ii.  (in  Amer.  ed.  vol.  ii.)  pp.  219  seq.] 


48 


THE  MERCANTILE  SYSTEM 


in  Germany,  economic  bodies  were  stretching  out  and 
becoming  political;  everywhere  new  state  systems  of  econ- 
omy and  finance  were  arising,  able  to  meet  the  new  needs 
of  the  time.  Only  in  our  Fatherland  did  the  old  economic 
institutions  become  so  petrified  as  to  lose  all  life;  only  in 
Germany  were  the  foreign  trade,  the  manufacturing  skill, 
the  supply  of  capital,  the  good  economic  usages,  connec- 
tions and  traditions,  which  the  country  had  possessed  up 
to  1620,  more  and  more  completely  lost. 

And  it  was  not  simply  the  external  loss  in  men  and 
capital  which  brought  about  this  retrogression  of  Germany, 
during  a  period  of  more  than  one  century,  in  comparison 
with  the  Powers  of  the  West;  it  was  not  even  the  transfer- 
ence of  the  world's  trading  routes  from  the  Mediterranean 
to  the  ocean  that  was  of  most  consequence ;  it  was  the  lack 
of  politico-economic  organisation,  the  lack  of  consolidation 
in  its  forces.  What,  to  each  in  its  time,  gave  riches  and 
superiority  first  to  Milan,  Venice,  Florence,  and  Genoa; 
then,  later,  to  Spain  and  Portugal;  and  now  to  Holland, 
France,  and  England,  and,  to  some  extent,  to  Denmark  and 
Sweden,  was  a  state  policy  in  economic  matters,  as  superior 
to  the  territorial  as  that  had  been  to  the  municipal. 
Those  states  began  to  weave  the  great  economic  im- 
provements of  the  time  into  their  political  institutions  and 
policy,  and  to  bring  about  an  intimate  relation  between 
the  one  and  the  other.  States  arose,  forming  united,  and 
therefore  strong  and  wealthy,  economic  bodies,  quite 
different  from  earlier  conditions;  in  these,  quite  unlike 
earlier  times,  the  state  organisation  assisted  the  national 
economy  and  this  the  state  policy;  and,  quite  unlike 


AND  ITS  HISTORICAL  SIGNIFICANCE.  53 

tion.  Even  the  Burgundian  princes  had  done  much  for 
the  economic  unity  of  the  land  by  their  enlightened 
administration;  in  later  times  Holland  and  Amsterdam 
preponderated  so  greatly  in  power  and  resources,  that 
their  voice  was  frequently  decisive  and  alone  considered. 
More,  however,  was  done  for  consolidation  by  the  Eighty 
Years'  War  of  Independence,  and  by  the  House  of  Orange 
in  the  various  complicated  official  relations  in  which 
it  stood  towards  the  decisive  economic  questions  of  the 
time.  The  Admiralty  Board  (^Oberadmiralitatscollegiuni) 
remained  in  existence  only  for  a  few  years  (1589-1593); 
but  after  this  the  House  of  Orange  remained  at  the  head 
of  the  Admiralty  in  the  separate  states  ;  and  upon  the 
Admiralty  depended  not  only  the  fleet,  but  also  the  whole 
tariff  system,  and  indeed  all  maritime  trade.  Colonial 
policy,  navigation  policy,  the  regulation  of  the  Levant 
trade,  of  the  herring  and  whale  fisheries,  and  the  like, 
were  all  centralised.  A  glance  into  the  rich  contents  of 
the  "Resolution  Book  of  the  High  and  Mighty  Lords  the 
States-General  of  the  United  Netherlands  "  {Placaet-Boeck 
der  hochmogenden  Herren  Staaten-  Generael  der  vereinigte 
Nederlande)  shews  us  to  how  large  an  extent  the  economic 
and  commercial  policy  of  the  flourishing  time  of  the  re- 
public was  the  outcome  of  a  common  Netherlandish 
egoism.  Its  rapid  declension  begins  with  the  period 
during  which  there  was  no  governor  {Stadtholder) ;  ^  and 
the  most  signal  cause  of  this  decline  was  the  preponder- 
ance in  one  field  after  another,  after  about  1650-1700, 
of  bourgeois  localism  and  provincialism. 

1  [1650-1672.] 


54 


THE  MERCANTILE  SYSTEM 


It  is  a  consideration  of  the  economic  history  of  France 
that  most  clearly  brings  out  the  fact  that  the  mercantilism 
that  was  everywhere  making  its  way  was  at  least  as  much  a 
matter  of  transformation  and  union  at  home  as  of  barriers 
against  the  world  outside.  Louis  XI.  (1461-1483)  cast  down 
the  great  houses  of  Burgundy  and  Anjou,  of  Orleans  and 
Bourbon,  resisted  the  narrow  selfishness  of  the  corpora- 
tions, sought  to  bring  about  uniform  weights  and  measures 
in  France,  and  forbade  the  importation  of  foreign  manu- 
factures. The  edict  of  1539,  which  introduced  freedom 
of  trade  in  corn  in  the  interior  of  France,  particularly 
between  the  several  provinces,  sets  out  with  the  assertion 
that  in  a  united  political  body  the  several  districts  should, 
at  all  times,  help  and  support  one  another.  The  declara- 
tion in  1577  that  trade,  and  in  158 1  that  industry,  be- 
longed to  the  droit  domanial  had  not  so  much  a  fiscal  as  a 
centralising  significance;  ^  as  was  the  case  generally  with  the 
ordinances  dating  from  the  time  of  the  great  de  I'Hopital 
(Chancellor  1560-1568).  Richelieu's  razing  of  the  fortresses 
of  the  nobility^  has  often  been  extolled  as  one  of  the  most 
important  steps  towards  internal  freedom  of  intercourse 
within  France;  his  active  measures  for  the  creation  of  a 

1  [By  an  edict  of  February,  1577,  a  duty,  under  the  name  of  traite 
domaniale,  was  imposed  on  the  exportation  of  grain,  wine,  cloth,  and 
wool ;  by  another  of  July,  1577,  a  bureau  des  finances  was  established  in 
each  generalite^  composed  of  two  treasurers  for  the  domain  (in  the  nar- 
rower sense),  and  two  receivers-general  for  the  customs.  The  edict  of 
1581  compelled  all  artisans  as  yet  unorganised  to  form  themselves  into 
metiers,  and  to  purchase  lettres  de  jnaitrise  from  the  government,  but  gave 
master  craftsmen  a  wider  range  for  the  exercise  of  their  trade  than  had 
previously  been  permitted.] 

2  [1626.  On  the  subject  of  this  paragraph,  cf.  J.  H.  Bridges,  France 
under  Richelieu  and  Colbert.    Edinburgh,  1866.] 


AND  ITS  HISTORICAL  SIGNIFICANCE.  55 


French  marine  were  among  the  most  important  contribu- 
tions towards  the  development  of  an  independent  com- 
mercial policy  in  relation  to  other  countries.  Colbert's 
administration  (i 662-1 683)  was,  primarily,  a  struggle 
against  the  municipal  and  provincial  authorities  ;  of 
whom  CherueP  says  that  it  was  they  really  who  hindered 
economic  progress  and  the  improvement  of  trade  and 
manufactures.  The  submission  of  the  towns  to  a  uni- 
form ordinance,  the  partial  abolition  of  the  provincial 
Estates,  the  diminution  of  the  power  of  the  provincial 
governor,  and  his  replacement  by  the  intendent  ;  these 
were  measures  which,  like  his  great  road  and  canal 
works,  his  interest  in  posts  and  insurance,  in  technical 
and  artistic  education,  in  exhibitions  and  model  build- 
ings created  by  the  state,  in  private  and  public  model 
industrial  establishments,  his  reform  of  river  tolls,  his 
union  of  the  inner  provinces  in  a  uniform  customs  system, 
—  all  aimed  at  the  one  thing,  to  make  of  the  French 
people  under  its  brilliant  monarchy  a  noble  and  united 
body,  united  in  civilisation  as  well  as  in  government,  and 
worthy  of  the  name  of  nation.  The  great  laws  of  Colbert, 
the  ordonnance  civile  of  1667,  the  edit  general  sur  les  eaux 
et  les  forets  of  1669,  the  ordonnance  crijuinelle  of  1670, 
the  ordonnance  de  conunerce  of  1673,  founded  the  legal 
as  well  as  the  economic  unity  of  France;  even  economi- 
cally they  are  more  important  than  the  tariffs  of  1664 
and  1667,  for  these  did  not  succeed  even  in  removing 

1  [A.  Cheruel,  author  of  the  Histoire  de  V ad^ninistration  7nonarchique  en 
France  (1855),  the  Histoire  de  France  pendant  la  minorite  de  Louis  XIV 
(1878-1880),  the  Histoire  de  France  sous  le  ministere  Mazarin  (1882-1883), 
etc.] 


56 


THE  MERCANTILE  SYSTEM 


the  differences  between  the  pays  d'etats  and  the  pays 
d' election  ?■ 

Austria,  as  late  as  1748,  had  not  got  beyond  a  very 
loose  association  of  provinces.  It  was  then  determined, 
in  imitation  of  the  Prussian  administration,  that  things 
should  be  different.  The  Prussian  government  had  been 
able,  since  the  days  of  the  Great  Elector  (i  640-1 688),  and 
still  more  during  the  reign  of  Frederick  William  1.  (1713-- 
1740),  to  create  a  financial,  economic,  and  military  whole, 
such  as  there  was  no  other  on  the  continent,  and  this 
out  of  the  most  refractory  materials,  out  of  territories 
lying  far  apart  and  almost  hostile  one  to  another.  What 
is  more,  this  was  successfully  carried  through  at  the  very 
period  when  the  administration  had  set  before  itself  the 
purpose  of  retrieving  lost  time  within  the  territories 
themselves,  and  securing  what  many  other  districts  of 
Germany  had  already  obtained  by  1600,  that  is,  their 
unity  and  self-sufficiency.  At  the  very  time  that  it  was 
engaged  in  Brandenburg,  Pom.erania,  Magdeburg,  East 
Prussia,  and  the  Rhine  provinces  (Cleves  and  Mark), 
in  subjecting  the  towns  and  the  nobles  to  the  authority 
of  the  state,  and  in  creating  a  united  provincial  adminis- 

1  [The  pays  d'etats  were  those  provinces  of  France  in  which  assemblies 
of  Estates  survived  and  retained  some  authority.  The  most  important  of 
these  were  Languedoc,  Brittany,  Burgundy,  Provence,  Artois,  Hainault,  the 
Cambresis,  and  Beam.  These  were  all  frontier  provinces,  which  had  been 
brought  under  the  direct  authority  of  the  French  crown  at  a  comparatively 
late  date,  and  had  been  allowed  to  retain  a  good  deal  of  their  old  autonomy. 
Colbert  was  unable  to  secure  the  removal  of  the  customs  barriers  between 
these  provinces  and  the  rest  of  France,  which  was  known  as  pays  d' elec- 
tion, from  its  division  into  districts  for  purposes  of  financial  administration 
called  elections,  after  the  officials,  elus  (i.e.  appointed  iox  the  purpose),  who 
presided  over  them.] 


AND  ITS  HISTORICAL  SIGNIFICANCE.  57 


tration,  it  took  in  hand  the  task  of  giving  the  whole  group 
of  poor  little  territories  a  real  political  and  economic 
unity,  of  taking  part  in  European  politics,  and  of  securing, 
by  an  independent  policy  in  trade  and  industry,  for  these 
northern  lands,  bare  as  they  were  of  men,  devoid  as  they 
were  of  maritime  commerce  or  mines  or  considerable 
manufactures,  a  place  by  the  side  of  the  old  and  wealthy 
Great  Powers.  The  whole  character  of  the  Prussian  admin- 
istration from  1680  to  1786  was  determined  by  the  way  in 
which  this  state,  with  its  small  and  broken  geographical 
basis,  set  about  combining  a  national  policy  in  pursuit  of 
German-Protestant  and  mercantilist  objects,  with  the  tasks 
of  territorial  rule  handed  down  to  it  by  the  past;  and  by 
the  way  in  which  it  carried  out,  in  war  and  peace,  in 
administration  and  economy,  a  national  state  policy  in  the 
"great  style"  with  scarcely  more  than  territorial  means. 
Our  present  task  has  only  been  to  shew  how  close  was  the 
connection,  in  Prussia  as  elsewhere,  between,  on  the  one 
side,  reform  and  centralisation  at  home,  the  transforma- 
tion of  territorial  economies  into  a  national  economy 
("  yolks'"  wirthschaft),  and  the  mercantile  system  on  the 
other;  how,  here  as  elsewhere,  domestic  policy  and  foreign 
policy  supplemented  one  another  as  indispensable  elements 
in  one  system. 

If  we  pause  for  a  while  to  consider  this  foreign  and 
external  economic  policy  of  the  European  states  of  the 
seventeenth  and  eighteenth  centuries, —  which  it  has 
hitherto  been  the  custom  to  regard  as  the  essential  feature 
of  the  mercantile  system, —  it  is  not,  of  course,  our  pur- 


58 


THE  MERCANTILE  SYSTEM 


pose  to  describe  the  details  of  its  several  forms.  The 
general  features  of  its  regulations  are  well  enough  known. 
Difficulties  were  put  in  the  way  of  the  importation  of 
manufactured  goods;  and  their  production  and  exportation 
were  favoured  by  the  prohibition  of  the  export  of  raw 
materials,  by  bounties  on  export,  and  by  commerical 
treaties.  Encouragement  was  given  to  domestic  shipping, 
to  the  fisheries,  and  to  the  coasting  trade  by  restricting  or 
forbidding  foreign  competition.  Commerce  with  the  colo- 
nies, and  the  supplying  of  them  with  European  wares,  was 
reserved  for  the  mother  country.  The  importation  of 
colonial  produce  had  to  take  place  directly  from  the  colony 
itself,  and  not  by  way  of  other  European  ports;  and  every- 
where an  attempt  was  made  to  establish  direct  trading 
relations  by  great  privileged  trading  companies,  and  by 
state  aid  in  manifold  ways.  England  promoted  the  export 
of  corn  and  the  prosperity  of  agriculture  at  the  same  time 
by  the  payment  of  bounties;^  France  hindered  the  export 
of  corn  for  the  benefit  of  industry;  Holland,  in  its  later 
days,  sought  to  create  very  large  stores  of  corn  and  a 
very  free  trade  in  corn,  so  as  both  to  ensure  a  due  domestic 
supply  and-  to  encourage  trade.  But,  as  we  have  already 
said,  an  account  of  these  several  measures  would  go  beyond 
the  purpose  of  this  essay.  The  general  features  are 
known;  the  details  have  even  yet  not  been  subjected  to 
due  scientific  investigation.    Our  only  purpose  here  is  to 

1  [From  1689  onward.  Compare  hereon  the  strong  expressions  of  Cun- 
ningham, Growth  of  English  Industry  and  Commerce,  ii.  (1892),  pp.  371  seq. 
It  is  there  described  as  "  a  pohcy  exclusively  English,"  "  a  masterly  stroke 
of  policy,  since  it  appears  to  have  occasioned  the  great  advance  in  agricult- 
ural improvement  which  took  place  while  it  was  maintained,"  "  the  one 


AND  ITS  HISTORICAL  SIGNIFICANCE.  S9 

grasp  the  fundamental  ideas  of  the  system;  which,  natu- 
rally, found  varying  expression,  here  in  high  duties,  there 
in  low,  here  in  the  prevention,  there  in  the  encouragement 
of  the  corn  trade.  The  thought  pursued  everywhere  was 
this:  as  competition  with  other  countries  fluctuated  up 
and  down,  to  cast  the  weight  of  the  power  of  the  state 
into,  the  scales  of  the  balance  in  the  way  demanded  in  each 
case  by  national  interests. 

In  proportion  as  the  economic  interests  of  whole  states, 
after  much  agitation  of  public  opinion,  found  a  rallying- 
point  in  certain  generally  accepted  postulates,  there  could 
not  fail  to  arise  the  thought  of  a  national  policy,  of  protec- 
tion by  the  state  against  the  outside  world,  and  of  the  sup- 
port by  the  state  of  great  national  interests  in  their  struggle 
with  foreign  countries.  The  conception  of  a  national  agri- 
culture, of  a  national  industry,  of  national  shipping  and 
fisheries,  of  national  currency  and  banking  systems,  of  a 
national  division  of  labour,  and  of  a  national  trade  must . 
have  arisen  before  the  need  was  felt  of  transforming  old 
municipal  and  territorial  institutions  into  national  and 
state  ones.    But,  as  soon  as  that  had  taken  place,  it  must 
have  seemed  a  matter  of  course  that  the  whole  power  of 
the  state,  in  relation  to  other  countries  as  well  as  at  home, 
should  be  placed  at  the  service  of  these  collective  interests; 
just  as  the  political  power  of  the  towns  and  territories  had 
served  their  municipal  and  district  interests.    The  struggle 

part  of  the  scheme  known  as  the  Mercantile  System  which  was  original  to 
England,"  and  -  the  corner-stone  of  English  prosperity."  For  Adam  Sm  th  s 
arguments  against  the  bounty,  see  Wealth  of  Nations,  bk  iv.  ch  v.  (ed. 
Rogers ,t  81  seq.)  ;  and  for  Mr.  Hewins'  criticism  and  Professor  Cunnmg- 
ham's  rejoinder,  Economic  Journal,  ii.  698;  iv.  512.] 


60 


THE  MERCANTILE  SYSTEM 


for  existence,  in  economic  life  in  particular,  as  in  social 
life  in  general,  is  necessarily  carried  on  at  all  times  by 
smaller  or  larger  groups  and  communities.  That  will  also 
be  the  case  in  all  time  to  come.  And  the  practice  and 
theory  of  those  times,  answering,  as  they  did,  to  this  uni- 
versal tendency,  were  nearer  reality  than  the  theory  of  Adam 
Smith;  and  so  also  were  the  main  ideas  of  Frederick  List.^ 

We  are  not,  however,  concerned  just  now  with  this 
universal  tendency;  what  we  want  is  to  understand  the 
particular  form  in  which  it  then  expressed  itself,  and  the 
reason  for  it;  and  why  it  could,  in  later  times,  give  way 
so  far  before  other  tendencies. 

The  great  states  of  an  earlier  time  display  no  commer- 
cial policy  in  the  style  of  the  mercantile  system,  not 
because  the  Utopia  of  a  purely  individualistic  economic 
life  possessed  more  reality  then  than  later,  but  because 
they  were  not  united  economic  bodies;  as  soon  as  they 
became  such,  the  inheritance  of  such  economic  bodies  as 
had  previously  existed,  and,  above  all,  of  the  town  policy, 
passed  over  to  them.  It  was  not  because  money  and  money 
payments  or  industry  or  trade  suddenly  played  an  alto- 
gether new  role  in  the  days  of  Cromwell  and  Colbert,  that 
it  occurred  to  people  to  guide  the  course  of  exportation 
and  importation  and  colonial  trade,  and  to  subject  them 
to  governmental  control./  On  the  contrary,  it  was  because 
just  then,  out  of  the  earlier  smaller  communities,  great 
national  communities  had  grown  up,  whose  power  and  sig- 

1  [See  the  account  of  them  in  Ingram,  History  of  Political  Economy, 
191-194,  and  the  remarks  of  Professor  Marshall  in  Priticiples  of  Economics, 
3d  ed.,  pp.  69-70.] 


AND  ITS  HISTORICAL  SIGNIFICANCE.  61 


nificance  rested  on  their  psychological  and  social  concert, 
that  they  began  to  imitate,  not  what  Charles  V.  had  done 
in  Spain, ^  but  what  all  towns  and  territories  of  earlier 
times  had  done,  from  Tyre  and  Sidon,  from  Athens  and 
Carthage  onward;  to  carry  over  what  Pisa  and  Genoa,  Flor- 
ence and  Venice,  and  the  German  Hanse  towns  had  done 
in  their  time  to  the  broad  basis  of  whole  states  and  nations. 
The  whole  idea  and  doctrine  of  the  Balance  of  Trade,  as 
it  then  arose,  was  only  the  secondary  consequence  of  a 
conception  of  economic  processes  which  grouped  them 
according  to  states.  Just  as  up  to  this  time  attention 
had  been  fixed  on  the  exportation  from  and  importation 
to  particular  towns  and  territories,  so  now  people  tried 
to  grasp  in  their  minds  the  trade  of  the  state  as  a  whole, 
and  to  sum  it  up  in  such  a  way  as  to  arrive  at  a  better 
understanding  of  it  and  at  some  practical  conclusion. 
Such  a  grouping  and  combination  were  very  evidently 
suggested  in  a  country  like  England,  where,  on  account  of 
its  insular  position  and  the  moderate  size  of  the  land, 
the  national  economy  had  early  displayed  its  exports  and 
imports,  its  supply  of  money  and  of  the  precious  metals, 
as  a  connected  whole  to  the  eye  of  the  observer.^ 

All  economic  and  political  life  rests  upon  psychical 
mass-movements,  mass-sentiments,  and  mass-conceptions, 
gravitating  around  certain  centres.  That  age  could  begin 
to  think  and  act  in  the  spirit  of  free  trade,  which  had  left 
so  far  behind  it  the  toilsome  work  of  national  development 

1  [A  reference  to  a  common  assertion  ;  found,  for  instance,  in  Blanqui's 
History  of  Political  Economy,  trans.  Leonard,  pp.  212  seq.] 

2  Cf.  the  essay  by  Dr.  von  Heyking,  Zur  Geschichte  der  Handelsbilanz- 
iheorie,  1880. 


62 


THE  MERCANTILE  SYSTEM 


that  it  regarded  its  best  results  as  matters  of  course,  and 
forgot  the  struggle  they  had  cost;  an  age  which,  with 
cosmopolitan  sentiments,  with  great  institutions  and 
interests  of  international  traffic,  with  a  humanised  inter- 
national law,  and  an  individualist  literature  everywhere 
diffused,  was  already  beginning  to  live  in  the  ideas  and 
tendencies  of  a  world  economy  {Weltwirthschafi),  The 
seventeenth  century  had  just  managed  to  fight  its  way  up 
fronrto^aT sentiment  to  national  sentiment;  international 
law  as  yet  scarcely  existed.  The  old  bonds  which  had 
held  together  Catholic  states  had  been  broken;  all  the 
intellectual  movement  of  the  time  centred  in  the  new 
national  life;  and  the  stronger  and  sounder  beat  the  pulse 
of  that  life,  the  more  it  felt  its  individuality,  the  more 
inevitable  was  it  that  it  should  bar  itself  against  the  world 
outside  with  a  harsh  egoism.  Each  new  political  com- 
munity that  forms  itself  must  be  carried  along  by  a  strong 
and  exclusive  feeling  of  community;  these  are  the  roots  of 
its  strength.  The  struggle  for  self-sufficiency  and  indepen- 
dence is  as  natural  to  it  as  the  spirit  of  violent  rivalry 
which  hesitates  at  nothing  in  order  to  come  up  with, 
to  surpass,  and  to  crush  the  rivals  in  whom  it  always 
sees  enemies.  It  was  the  law  of  autarchy  by  which  the 
commercial  policy  of  those  times  was  exclusively  guided. 
The  endeavour  after  autarchy  ^  naturally  shews  itself  in  an 
especially  violent  and  one-sided  form  in  the  youth  of 
nations. 

1  [A  phrase  suggested  by  Aristotle's  description  of  the  state  as  Trao-r?? 
^xovna  Trepa?  t^?  avrapxeiag^  "  having  reached  the  end  "  (or  "  result ")  "  of 
entire  self-completeness  "  (or  "  self-sufficiency"),  Politics  I.  2,  §  8.] 


AND  :rs  HISTORICAL  SIGNIFICANCE.  63 


The  doctrine  of  the  natural  harmony  of  the  economic 
interests  of  all  states  is  just  as  false  as  the  opinion  then 
entertained  that  an  advantage  to  one  state  is  always  a 
disadvantage  to  another.  The  latter  was  an  opinion  which 
not  only  had  its  roots  in  the  earlier  stubborn  struggles 
between  towns  and  territories,  but  was  strengthened  just  at 
this  time  by  the  circumstance  that  the  possession  of  colo- 
nies, of  the  Indian  Spice  Islands,  and  of  the  silver  mines 
of  America  had  fallen  to  the  several  nations  only  as  the 
result  of  war  and  bloodshed.  It  seemed  unavoidable  that 
one  nation  should  have  to  recede  when  another  pressed  in. 
In  reality,  all  social  bodies,  and  therefore  economic  bodies 
among  them,  —  at  first  towns  and  districts,  and  afterwards 
nations  and  states, —  stand  to  one  another  in  a  double 
relation;  a  relation  of  action  and  reaction  by  which  they 
mutually  supplement  one  another,  and  a  relation  of  depen- 
dence, exploitation,  and  struggle  for  supremacy.  The 
latter  is  the  original  one  ;  and  only  slowly,  in  the  course 
of  centuries  and  millenniums,  is  the  antagonism  softened. 
Even  to-day  the  great  economic  Powers  seek  to  utilise 
their  economic  superiority  in  all  their  international  rela- 
tions, and  to  retain  weaker  nations  in  dependence;  even 
to-day  any  half-civilised  nation  or  tribe,  among  whom 
the  English  or  French  establish  themselves,  is  in  danger, 
first,  of  a  sort  of  slavery  for  debt  and  an  unfavourable  bal- 
ance of  trade,  and,  following  closely  in  the  wake,  of  politi- 
cal annexation  and  economic  exploitation, —  though  this, 
indeed,  may  turn  into  an  economic  education  for  it. 

In  the  seventeenth  and  eighteenth  centuries  the  rela- 
tions, and  especially  the  economic  relations,  between 


64  THE  MERCANTILE  SYSTE  W  \ 

States  were  particularly  hostile  and  har  n,  because  the 
new  economico-political  creations  were  fc*  the  first  time 
trying  their  strength,  and  because  it  was  the  first  time  that  i 
such  considerable  political  forces  were  available  for  the 
pursuit  of  commercial,  agricultural,  and  industrial  ends, — 
forces  which  might  seem,  if  only  properly  employed,  to 
promise  untold  wealth  to  every  state.  |  In  all  ages  history 
has  been  wont  to  treat  national  power  and  national  wealth 
as  sisters;  perhaps  they  were  never  so  closely  associated 
as  then.  The  temptation  to  the  greater  states  of  that  time 
to  use  their  political  power  for  conflict  with  their  eco- 
nomic competitors,  and  when  they  could,  for  their  destruc- 
tion, was  too  great  for  them  not  to  succumb  time  after  time, 
and  either  to  set  international  law  at  naught  or  twist  it  to 
their  purposes.  Commercial  competition,  even  in  times 
nominally  of  peace,  degenerated  into  a  state  of  undeclared 
hostility:  it  plunged  nations  into  one  war  after  another, 
and  gave  all  wars  a  turn  in  the  direction  of  trade,  industry, 
and  colonial  gain,  such  as  they  never  had  before  or  after. 

It  has  been  often  enough  remarked  that  the  period  of 
4he  wars  of  religion  was  followed  by  one  in  which  ^8- 
nomic  and  commercial  interests  governed  the  whole 
foreign  policy  of  European  states.  It  is  true  that  even 
the  expedition  of  Gustavus  Adolphus  to  Germany 
move  in  the  game  which  was  being  played  for  the  trade 
of  the  Baltic.  In  like  manner,  the  later  wars  of  Sweden, 
aiming  at  the  conquest  of  Poland,  and  the  aggressive 
movements  of  Russia  towards  the  Swedish  and  German 
provinces  on  the  Baltic,  were  all  directed  towards  the 
acquisition  and  domination  of  the  Baltic  trade. 


AND  ITS  HISTORICAL  SIGNIFICANCE.  65 


As  in  the  East  Indies,  the  ancient  source  of  supply  for 
(Oriental  wares,  for  pearls  and  spices,  the  Portuguese 
violently  pushed  their  way  in  first,  annihilated  Arabian 
trade  with  unheard-of  brutality,  and  imposed  upon  all  the 
Asiatic  tribes  and  states  the  rule  that  they  should  carry  on 
trade  with  Portuguese  alone;  so  in  later  times  the  Dutch 
were  able  to  drive  the  Portuguese  out,  to  get  for  them- 
selves a  like  monopoly  of  the  spice  trade,  to  keep  other 
Europeans  away  by  craft  and  by  mercantile  talent, 
—  if  need  were,  by  insolent  violence  and  bloodshed, 
and  to  hold  the  people  of  the  East  in  commercial  sub- 
jection. The  heroic  struggle  of  the  Dutch  for  religious 
liberty  and  for  freedom  from  the  Spanish  yoke  displays 
itself,  when  looked  at  in  a  "dry  light,''  as  a  century-long 
war  for  the  conquest  of  East  Indian  colonies,  and  an 
equally  long  privateering  assault  on  the  silver  fleets  of 
Spain  and  the  Spanish-American  colonial  trade.  These 
Dutch,  so  lauded  by  the  naif  free-trader  of  our  day  on 
account  of  the  low  customs-duties  of  their  early  days,  were 
from  the  first  the  sternest  and  most  warlike  of  monopolists 
after  the  mercantilist  fashion  that  the  world  has  ever  seen. 
As  they  suffered  no  trading  ship,  whether  European  or 
Asiatic,  in  East  Indian  waters,  without  a  Dutch  pass  to 
be  bought  only  with  gold  ;  as  by  force  of  arms  and  by 
treaty  they  kept  the  Belgian  port,  Antwerp,  shut  up 
against  commerce;^  as  they  crushed  the  Prussian  colony 

1  [By  the  clauses  in  the  Treaty  of  Westphalia,  1648,  providing  for  "  the 
closing  of  the  Scheldt,"  seagoing  vessels  were  forbidden  to  ascend  to  Ant- 
v^erp.  They  must  unload  at  a  Dutch  port,  and  thence  forward  their  mer- 
chandise to  Antwerp  by  river  barges.  The  Scheldt  was  re-opened  by  the 
French  in  1794.] 
F 


66 


THE  MERCANTILE  SYSTEM 


in  Africa/  and  countless  other  settlements  of  other  nations; 
so  at  home  they  forbade  all  herring-fishers  to  take  their 
wares  to  any  but  the  Dutch  market,  and  prohibited  their 
passing  into  foreign  service,  or  taking  to  foreign  countries 
the  implements  of  their  craft.  Although  at  the  beginning 
they  had  low  duties  on  imports  and  exports,  they  resorted 
constantly  to  arbitrary  prohibitions  whenever  they  thought 
they  could  thereby  further  Dutch  interests;  in  167 1  they 
imposed  the  heaviest  duties  on  French  goods;  and,  in  the 
eighteenth  century,  when  they  had  become  too  pusillani- 
mous to  wage  war  for  their  commercial  ends,  they  resorted 
to  the  extremest  protectionism.  In  the  time  of  their 
prosperity  they  were  carrying  on  war  well-nigh  all  the 
time,  and  war  for  commercial  ends;  and  they  shewed 
more  skill  than  any  other  state,  in  the  seventeenth  century, 
in  getting  out  of  their  wars  fresh  commercial  advantages. 
Their  obstinate  pursuit  of  monopoly  gave  rise  to  England's 
navigation  law  and  Colbert's  tariff;  and  attracted  England 
and  France  themselves  towards  a  like  policy  of  pursuing 
narrowly  mercantilist  objects  by  force  of  arms.  The 
bloody  and  costly  wars  of  England  with  the  Dutch  were, 
Noorden  ^  tells  us,  at  bottom  nothing  but  a  duel  over  the 
maintenance  of  the  Navigation  Acts.  The  French  invasion 
of  Holland  (1672)  was  an  answer  to  their  foolish  and  ex- 
/travagant  reprisals  against  Colbert's  tariff. 

The  War  of  the  Spanish  Succession,  like  the  War  of  the 
Grand  Alliance  in  1689- 169 7,  was,  primarily,  the  struggle 

1  [The  possessions  of  Brandenburg  on  the  Gold  Coast,  obtained  in  1681- 
1683,  were  surrendered  to  the  United  Netherlands  in  1720.] 

2  [Karl  von  Noorden,  author  of  Europdische  Geschichte  im  achtz^hnten 
JahrhundertT^ 


AND  ITS  HISTORICAL  SIGNIFICANCE,  67 


of  England  and  Holland,  in  concert^  against  the  growing 
industrial  and  commercial  preponderance  of  France,  and 
against  the  danger  of  the  union  of  French  trade  with  the 
colonial  power  of  Spain.  ^  It  was  a  struggle  for  the  lucra- 
tive Spanish-American  trade  which  mainly  occasioned 
the  antagonism  of  England  and  France  till  after  the  middle 
of  the  eighteenth  century.  The  supply  of  the  Spanish- 
American  colonies  with  European  manufactures  could 
only  take  place  by  means  of  the  great  West  Indian  smug- 
gling trade,  or  through  Spain,  i,e,  the  Spanish  port- towns. 
As  Spanish  industry  supplied  only  a  part  of  the  need,  the 
question  was,  whom  Spain  would  allow  to  share  in  the 
trade, —  whether  it  would  wink  at  smuggling,  and,  if  so, 
to  what  extent  and  by  whom ;  whether  France  could  cir- 
cumvent England,  or  England  France,  in  Spain  and  the 
West  Indies.  The  war,  also,  of  England  with  Spain  from 
1739  to  1748, —  which,  in  1744,  turned  itself  into  a  war 
with  Spain  and  France, —  had,  in  the  main,  no  other  object 
than  this,  to  obtain  a  free  course  for  the  English  smuggling 
trade  with  Spanish  America;  ^  it  was  generally  nicknamed 
by  public  opinion  *^the  Smuggler's  War." 

The  Seven  Years'  War  had  its  origin,  as  everyone  knows, 
in  the  colonial  rivalry  of  England  and  France  in  North 
America.  Whether  the  Ohio  and  Mississippi  should 
furnish  the  Romance  race  or  the  Teutonic  with  a  field  for 
colonisation  and  trade,  whether  maritime  and  commercial 
supremacy  for  the  next  hundred  or  two  hundred  years 

1  Cf.  the  instructive  little  paper  of  H.  Meinberg  (suggested  by  some  re- 
marks of  T.  G.  Droysen)  on  Das  Gleichgewichtssystem  Wilhelms  III  und 
die  engUsche  Handelspolitik,  Berlin,  1869. 

2  [Cf.  Lecky,  History  of  England  in  the  Eighteenth  Century^  vol.  i.  ch.  iii.] 


68 


THE  MERCANTJTE  SYSTEM 


should  belong  to  England  or  France,— that  was  the  far- 
reaching  economic  quarrel  into  which  the  great  king  of 
Prussia  was  drawn  because  he  would  not  suffer  his  old  ally 
France  to  attack  his  old  enemy  England  in  Hanover,  i,e,  in 
Germany.  In  defending  Germany's  neutrality  in  this  com- 
mercial and  colonial  war,  he  was  drawn  into  it  himself; 
and  when  his  brave  troops  defeated  the  French  at  Rossbach 
(1757)  and  elsewhere,  they  decided  at  the  same  time  the 
great  questions  of  the  world's  trade  and  of  future  colonial 
development.  Without  the  victories  of  the  Prussian 
grenadiers  and  the  English  fleet,  England  would  not  to- 
day have  its  world-wide  trade,  and  the  United  States  of 
America  would  not  exist.  It  is  probable  that  French  would 
now  be  spoken  alike  on  the  Ohio  and  the  Mississippi,  at 
Calcutta  and  Bombay. 

English  commercial  greatness  and  supremacy  date  from 
the  successes  of  the  war  of  1 756-1 763.  But  the  climax 
in  its  career  of  colonial  conquest  by  force  of  arms,  and  of 
intentional  destruction,  dictated  by  trade  jealousy,  of  the 
competing  mercantile  navies  of  France,  Holland,  Germany, 
and  Denmark,  was  reached  by  Great  Britain  during  the 
Napoleonic  war.  The  commercial  struggle  between  Eng- 
land and  France,  the  shameless  brutalities  of  the  English 
fleet  on  the  one  side  and  the  continental  blockade  on 
the  other,  form  the  terrible  concluding  drama  in  the  age 
of  commercial  wars.  Henceforward  another  spirit  begins 
to  make  its  way  in  commercial  policy  and  in  interna- 
tional morality;  although  the  old  traditions  have  not 
yet  been  entirely  overcome,  and,  indeed,  can  nevpr  be 
entirely  overcome,  so  long  as  there  is  such  a  thing  as 


AND  ITS  HISTORICAL  SIGNIFICANCE,  69 


independent  politico-economic  life  with  separate  national 
interests. 

The  long  wars,  each  lasting  several  years,  or  even  dec- 
ades, which  fill  the  whole  period  from  1600  to  1800  and^ 
have  economic  objects  as  their  main  aim;  the  open  decla- 
ration by  the  Grand  Alliance  in  1689  that  their  object 
was  the  destruction  of  French  commerce;  the  prohibition 
by  the  Allies  of  all  trade,  even  by  neutrals,  with  France, 
without  the  slightest  regard  to  international  law;  all  this 
shews  the  spirit  of  the  time  in  its  true  light.  The 
national  passion  of  economic  rivalry  had  been  raised 
to  such  a  height  that  it  was  only  in  wars  like  these 
that  it  could  find  its  full  expression  and  satisfaction. 
To  be  content,  in  the  intermediate  years  of  peace,  to 
carry  on  the  conflict  with  prohibition,  tariffs,  and  navi- 
gation laws  instead  of  with  sea  fights;  to  give,  as  they 
did,  in  these  years  of  peace,  somewhat  more  attention 
to  the  infant  voice  of  international  law  than  in  time 
of  war  —  this  was  in  itself  a  moderating  of  international 
passion. 

The  very  idea  of  international  law  is  a  protest  against 
the  excesses  of  national  rivalry.  All  international  law 
rests  on  the  idea  that  the  several  states  and  nations 
form,  from  the  moral  point  of  view,  one  community. 
Since  the  men  of  Europe  had  lost  the  feeling  of  com- 
munity that  had  been  created  by  the  Papacy  and  Empire, 
they  had  been  seeking  for  some  other  theory  which  might 
serve  to  support  it;  and  this  they  found  in  the  reawaken- 
ing "law  of  nature."    But  the  particular  ideas  for  which 


70 


THE  MERCANTILE  SYSTEM 


in  the  first  instance  men  strove,  and  for  which  they  sought 
arguments  pro  et  contra  in  the  law  of  nature,  were  mainly 
products  of  the  economic  and  commercial  struggle  then 
proceeding. 

Inasmuch  as  the  states  that  were  the  first  to  obtain  colo- 
nies on  a  large  scale,  Spain  and  Portugal,  had  secured  from 
the  Pope  a  partition  of  the  whole  oceanic  world,  and  its 
designation  by  him  as  their  exclusive  property,  the  law  of 
nature,  when  it  made  its  appearance,  put  forward  the 
doctrine  of  Mare  liberum.  But  while  in  this  way  Hugo 
Grotius  in  1609  created  a  legal  justification  for  his  Dutch 
fellow-countrymen  in  pushing  their  way  into  the  old  pos- 
sessions of  the  Portuguese  and  Spaniards,  the  English 
maintained  the  opposite  theory  of  Mare  clausum,  and  of 
the  exclusive  lordship  of  England  over  the  British  seas,  in 
order  to  free  their  necks  from  the  competition  of  the 
Dutch  in  navigation  and  the  fisheries.  Denmark  appealed 
to  its  sovereignty  of  the  sea  as  a  justification  for  its  oppres- 
sive tolls  at  the  Sound;  and  the  other  Baltic  powers 
sought,  on  the  same  ground,  to  forbid  the  Great  Elector  to 
build  a  fleet.  The  great  principle  of  the  freedom  of  the 
sea  did,  indeed,  slowly  gain  general  currency;  but  at  first 
each  nation  only  recognised  the  particular  theory  that 
promised  it  some  advantage. 

Almost  all  the  wars  of  the  time  were  waged  in  the  name 
of  the  European  "Balance.'*  And  who  will  deny  that  this 
idea  had  its  justification,  and  that  it  laid  the  foundation 
for  the  peaceful  future  of  a  great  community  of  states? 
But,  at  first,  it  was  a  mere  phrase  taken  from  international 
law,  and  used  to  justify  every  caprice  on  the  part  of  the 


AND  ITS  HISTORICAL  SIGNIFICANCE.  71 


Great  Powers,  every  intervention  in  the  relations,  and  every 
interference  with  the  fate  of  the  smaller  states :  it  was  the 
cloak  which  hid  the  silent  conspiracy  of  the  western  Powers 
to  prevent  the  rise  of  a  new  Power,  like  the  Prussian,  and 
to  keep  its  trade  and  its  whole  economic  life  in  the  bonds 
of  dependence. 

The  gradual  growth  of  the  milder  principle,  more 
favourable  to  the  small  states,  which  is  summed  up  in  the 
phrase  "free  ships,  free  goods,"  out  of  the  mediaeval  prin- 
ciple found  in  the  Consolato  del  Mare ^'^  which  allowed  the 
confiscation  of  the  enemy's  property  even  on  friendly 
neutral  ships,  is  one  of  the  great  gains  in  international  law 
in  the  eighteenth  century.  But  England  has  never  accom- 
modated herself  to  it,  and  has,  with  unheard-of  assurance, 
and  with  decisions  of  the  Court  of  Admiralty  about 
prizes  which  can  have  been  determined  by  nothing  but 
national  egoism,  succeeded  in  injuring  the  trade  of 
neutrals  everywhere,  in  time  of  war,  even  when  it  could 
not  destroy  it.^  Blisch^  shewed,  in  1797,  that  of  the 
last  one  hundred  and  forty-four  years  England  had  spent 
sixty-six  in  the  most  sanguinary  naval  wars.  They  had 
all  been  more  or  less  concerned,  on  the  one  side,  with 
the  conquest  of  colonies  by  force  of  arms,  on  the  other, 

1  \Consolato  del  Mare,  "  seemingly  a  collection  of  the  maritime  usages  of 
the  trading  peoples  of  the  Mediterranean  seaboard  made  at  Barcelona  about 
the  middle  of  the  fourteenth  century."  T.  A.  Walker,  Science  of  Inter- 
natio7ml  Law  (1893),  p.  395.    See,  also,  Hallam,  Middle  Ages,  ch.  ix.  pt.  2.] 

^  [For  a  different  view  of  the  action  of  England,  and  of  the  "  reflections  " 
tihat  have  been  cast  "  upon  the  judicial  impartiality  of  the  great  Admiralty 
judge,"  Lord  Stowell,  see  Walker,  op,  cit.  pp.  395  seq,] 

3  [Johann  Georg  Biisch,  1728-1800,  an  influential  publicist  and  writer  on 
trade.] 


72 


THE  MERCANTILE  SYSTEM 


with  the  destruction  of  the  neutral  trade,  i,e.  the  trade  of 
the  smaller  states. 

The  blows  of  the  English  are  nearest  to  us  in  time;  they 
have  also  vitally  affected  Germany;  and,  accordingly, 
we  are  inclined,  —  measuring  with  the  standard  of  to- 
day, —  to  condemn  them  most.  On  the  whole,  however, 
they  were  naught  else  than  what  all  the  more  powerful 
commercial  powers  allowed  themselves  in  their  treatment 
of  the  weaker.  And  although  we  condemn  the  whole  period 
for  excesses  in  the  politico-commercial  struggle,  and  see 
everywhere  much  injustice  and  error  mingled  with  it,  yet 
we  must  allow  that  passions  and  blunders  such  as  these 
were  the  necessary  concomitants  of  the  new  state  policy, 
of  the  developing  national  economies;  we  must  feel  that 
those  states  and  governments  are  not  to  be  praised  which 
did  not  pursue  such  a  policy,  but  those  who  knew  how  to 
apply  it  in  a  more  skilful,  energetic,  and  systematic  way 
.than  others.  For  it  was  precisely  those  governments 
which  understood  how  to  put  the  might  of  their  fleets  and 
admiralties,  the  apparatus  of  customs  laws  and  navigation 
laws,  with  rapidity,  boldness,  and  clear  purpose,  at  the 
service  of  the  economic  interests  of  the  nation  and  state, 
which  obtained  thereby  the  lead  in  the  struggle  and  in 
riches  and  industrial  prosperity.  Even  if  they  frequently 
went  too  far,  and  were  led  by  theories  that  were  only  half 
true,  and  gathered  riches  by  violence  and  exploitation, 
yet,  at  the  same  time,  they  gave  the  economic  life  of  their 
people  its  necessary  basis  of  power,  and  a  corresponding 
impulse  to  its  economic  movement;  they  furnished  the 
national  striving  with  great  aims;  they  created  and  liber- 


AND  ITS  HISTORICAL  SIGNIFICANCE,  73 

ated  forces  which  were  absent  or  slumbered  in  the  states 
they  outstripped.  And  it  was  natural  that  what  in  these 
struggles  was  brutal  and  unjust  should  be  lost  to  sight  in 
each  nation  in  the  glow  of  national  and  economic  success. 
We  can  understand  that  the  several  peoples  asked  only 
whether  a  Cromwell  or  a  Colbert  on  the  whole  furthered 
national  prosperity,  and  not  whether  he  did  injustice  to 
foreigners  in  some  one  point.  And  historical  justice  does 
not  demand  more :  it  gives  its  approbation  to  systems  of 
government  which  help  a  people  to  reach  the  great  goal  of 
national  greatness  and  moral  unity  at  a  given  time  and  with 
the  means  of  that  time,  at  home  and  abroad;  systems,  more- 
over, which  have  redeemed  the  harshness  of  national  and 
state  egoism  as  regards  neighbouring  peoples,  by  a  model 
administration  at  home. 

At  any  rate  one  thing  is  clear;  a  single  community  could 
not  withdraw  itself  from  the  great  current  wherein  the  whole 
group  of  European  nations  was  being  swept  along;  and 
least  of  all,  one  of  the  smaller  states  which  was  still  making 
its  way  upward.  In  such  a  time  of  harsh  international  and 
economic  struggles,  he  who  did  not  put  himself  on  his 
defence  would  have  been  remorselessly  crushed  to  pieces. 
As  early  as  the  sixteenth  century,  it  became  apparent  what 
a  disadvantage  it  was  for  Germany  that  it  had  neither  the 
national  and  politico-commercial  unity  of  France,  nor  the 
mercantilist  regulations  to  which  both  England  and 
France  were  beginning  to  resort.  And  this  was  still  more 
apparent  in  the  seventeenth  century.  The  military  and 
maritime  Powers  of  the  West  not  only  drove  the  Germans 
out  of  the  few  positions  they  had  at  first  obtained  in  the 


74 


THE  MERCANTILE  SYSTEM 


colonial  world;  they  menaced  more  and  more  even  the 
trade  they  had  long  possessed.  The  Hanseatic  merchants 
were  driven  out  of  one  position  after  another.  One  after 
another  the  mouths  of  the  great  German  streams  passed  into 
foreign  hands :  the  Rhine  came  under  French,  Dutch,  and 
Spanish  suzerainty,  the  Weser  under  Swedish,  the  Elbe  under 
Danish,  the  Oder  under  Swedish,  the  Vistula  under  Polish 
control.  The  tolls  imposed  by  these  foreign  masters  at  the 
mouths  of  the  streams  gave  the  river  trade,  in  many  cases 
intentionally,  its  last  blow«  While  the  Dutch  destroyed 
the  Hanseatic  trade  in  their  own  markets  by  differential 
duties;  while  they  and  the  English  made  the  direct  trade 
of  Germans  with  Spain  and  Portugal  impossible,  by  violence 
and  the  confiscation  of  ships;  the  Dutch  misused,  with  in- 
creasing dexterity,  their  growing  preponderance  on  the 
Rhine  and  in  the  Baltic  to  put  Germany  itself  into  a  position 
of  unworthy  dependence  in  all  matters  of  business.  As  the 
only  or  most  important  purchasers  of  German  raw  products 
and  the  only  suppliers  of  Indian  spices,  they  secured  an 
almost  intolerable  monopoly,  which  reached  its  climax 
through  the  unconditional  dependence  of  Germany  on  the 
Dutch  money  market  during  the  period  1600-1750.  And 
what  Holland  was  with  regard  to  Indian  wares,  France  was 
with  regard  to  manufactures  and  objets  (fart.  Those 
Hanseatic  towns  that  were  not  ruled  by  Dutch  business 
managers  {Lieger)  were  in  slavery  to  English  creditors. 
Denmark  sought  to  destroy  German  navigation,  fisheries, 
and  trade  by  its  tolls  on  the  Sound  and  the  Elbe,  and  by 
its  commercial  companies.  And  all  these  conditions 
affected  Germany  most  severely,  not  in  the  Thirty  Years' 


AND  ITS  HISTORICAL  SIGNIFICANCE.  75 


War,  but  one,  two,  or  three  generations  later;  when  the 
western  Powers  had  firmly  established  their  new  politico- 
economic  institutions.  With  naive  pleasure  in  their 
maritime  and  commercial  strength,  with  the  support  of  a 
brutal  international  law,  and  a  diplomacy  which  forced 
upon  weaker  and  less  experienced  peoples,  by  every  art  of 
intrigue,  unprofitable  and  perfidious  commercial  treaties, 
they  openly  adopted  the  half-true,  half-false  doctrine  that 
the  trade  advantage  of  one  state  always  was  and  always 
must  be  the  disadvantage  of  another.  In  the  period 
from  1670  to  1750  the  bitterest  lamentations  were  heard  in 
Germany  about  this  commercial  dependence,  about  French 
manufactures,  about  the  traders  from  every  prince's  land 
that  overran  the  country :  the  torrent  of  complaint  touch- 
ing the  pitiable  condition  of  the  imperial  government, 
which  was  unable  to  give  any  assistance^  increased  like  an 
avalanche.  The  state  of  commerce  in  Germany,  cried 
the  most  distinguished  economic  writer  of  the  time, 
depends  upon  the  interest  taken  in  it  in  the  Reichstag  at 
Ratisbon.  At  last  all  the  voices,  alike  of  scholars  and  of 
the  people,  came  together  in  unison:  There  is  but  one 
way  out  of  it  ;  we  must  do  what  Holland,  France, 
and  England  have  done  before  us;  we  must  exclude  the 
foreign  wares,  we  must  once  more  become  masters  in  our 
own  house»  Facts  had  taught  them,  with  inexorable  clear- 
ness, that,— at  a  time  when  the  most  advanced  nations 
were  carrying  on  the  collective  struggle  for  existence  with 
the  harshest  national  egoism,  with  all  the  weapons  of 
finance,  of  legislation,  and  of  force,  with  navigation  laws 
and  prohibition  laws,  with  fleets  and  admiralties,  with 


76 


THE  MERCANTILE  SYSTEM 


companies,  and  with  a  trade  under  state  guidance  and 
discipline, —  those  who  would  not  be  hammer  would 
assuredly  be  anvil. 

The  question  in  Germany  in  1680-1780  was  not  whether 
a  mercantilist  policy  was  necessary  and  desirable;  about 
that  there  was  agreement,  and  properly  so.  The  ideals 
of  Mercantilism,  though  they  may  have  been  presented  in 
an  exaggerated  form,  and  too  sharply  expressed  in  one= 
sided  economic  theories,  meant,  practically,  nothing  but 
the  energetic  struggle  for  the  creation  of  a  sound  state  and 
a  sound  national  economy,  and  for  the  overthrow  of  local 
and  provincial  economic  institutions;  they  meant  the 
belief  of  Germany  in  its  own  future,  the  shaking  off  of 
a  commercial  dependence  on  foreigners  which  was  con- 
tinually becoming  more  oppressive,  and  the  education  of 
the  country  in  the  direction  of  economic  autarchy.  The 
victories  of  the  Prussian  army  served  the  same  end  as 
the  financial  and  commercial  policy  of  the  state ;  be- 
tween them  they  raised  Prussia  to  a  place  among  the 
Great  Powers  of  Europe. 

The  difficulties  in  the  internal  economic  policy  of  the 
country  consisted  in  this :  that  the  Prussian  state,  instead 
of  being  a  nation,  included  only  a  limited  number  of  prov- 
inces; and  that,  at  the  same  time  as  it  adopted  a  pro- 
tective system  against  France,  Holland,  and  England,  it 
also  excluded  its  German  neighbours.  The  real  explana- 
tion is  that  the  Prussian  state  was  still  but  half-way  out  of 
the  period  of  territorial  development;  was  still,  so  to  speak, 
in  the  earlier  century  of  commercial  disputes  with  Ham- 
burg, Leipzig,  and  Danzig,  with  Poland,  Saxony,  and 


AND  ITS  HISTORICAL  SIGNIFICANCE.  77 


Other  neighbouring  territories;  and  it  could  make  use  of 
its  natural  superiority,  as  compared  with  neighbours  like 
these,  only  by  binding  its  provinces  together  in  an  enclosed 
and  exclusive  combination. 

We  have  reached  the  end  of  these  general  considerations 
as  to  the  historical  significance  of  the  mercantile  system. 
Our  argument  rested  on  the  proposition  that,  in  spite  of 
the  fact  that  it  is  the  individual  and  the  family  that  labour, 
produce,  trade,  and  consume,  it  is  the  larger  social  bodies 
which,  by  their  common  attitude  and  action,  intellectual 
as  well  as  practical,  create  all  those  economic  arrange- 
ments of  society,  in  relation  both  to  those  within  and  those 
without,  upon  which  depend  the  economic  policy  of  every 
age  in  general  and  its  commercial  policy  in  particular. 
We  saw  that  the  feeling  and  recognition  of  economic  soli- 
darity, in  regard  alike  to  those  within  and  those  without, 
necessarily  created  at  the  same  time  a  corporate  egoism. 
From  this  egoism  the  commercial  policy  of  every  age 
receives  its  impulse. 

We  have,  in  the  next  place,  laid  emphasis  on  the  propo- 
sition that  historical  progress  has  consisted  mainly  in  the 
establishment  of  ever  larger  and  larger  communities  as  the 
controllers  of  economic  policy  in  place  of  small.  The 
seventeenth  and  eighteenth  centuries  seemed  to  us  the 
birth  hour  of  modern  states  and  modern  national  econ- 
omies ;  and,  therefore,  to  have  been  necessarily  char- 
acterised by  a  selfish  national  commercial  policy  of  a 
harsh  and  rude  kind.  Whether  such  a  policy  was  rightly 
directed  in  details  depended  on  the  information  and 


78 


THE  MERCANTILE  SYSTEM 


sagacity  of  the  personages  who  guided  the  state;  whether 
it  was  to  be  justified  as  a  whole,  whether  as  a  whole  it  had  a 
probability  of  success,  that  depended,  then  as  ever,  on  the 
question  whether  it  accompanied  a  great  upward-moving 
stream  of  national  and  economic  life. 

The  progress  of  the  nineteenth  century  beyond  the  mer- 
cantilist  policy  of  the  eighteenth  depends,  —  keeping  to 
this  thought  of  a  succession  of  ever  larger  social  communi- 
ties, —  on  the  creation  of  leagues  of  states,  on  alliances  in 
the  matter  of  customs  and  trade,  on  the  moral  and  legal 
community  of  all  civilised  states,  such  as  modern  inter- 
national law  is  more  and  more  bringing  into  existence  by 
means  of  a  network  of  international  treaties. 

But,  of  course,  by  the  side  of  this  stands  another  and 
not  less  important  chain  of  connected  phenomena,  which 
also  helps  to  explain  the  contrast  between  the  nineteenth 
century  on  the  one  side,  and  the  seventeenth  and  eigh- 
teenth on  the  other.  The  struggle  of  social  bodies  with 
one  another,  which  is  at  times  military,  at  other  times 
merely  economic,  has  a  tendency,  with  the  progress  of 
civilisation,  to  assume  a  higher  character  and  to  abandon 
its  coarsest  and  most  brutal  weapons.  The  instinct 
becomes  stronger  of  a  certain  solidarity  of  interests,  of  a 
beneficent  interaction,  of  an  exchange  of  goods  from  which 
both  rivals  gain.  It  was  in  this  way  that  the  strife  of  towns 
and  territories  had  been  softened  and  moderated  with  time, 
until,  on  the  foundation  of  still  greater  social  bodies,  the 
states,  it  had  passed  into  a  moral  influence,  and  an  obliga- 
tion to  educate  and  assist  the  weaker  members  within  the 
larger  community. 


APPENDIX  1. 


THE  PRUSSIAN  SILK  INDUSTRY  IN  THE  EIGHTEENTH 
CENTURY. 

1892. 

I  HAVE  already  attempted,  some  years  since,  to  shew  that 
the  whole  mercantilist  policy  can  only  be  understood  when 
it  is  regarded  as  a  stage  and  a  means  in  the  creation  of  a 
larger  economic  and  poUtical  community.  As  the  mediaeval 
city-states  and  the  great  lordships  became  more  and  more 
incapable  of  serving  as  adequate  organs  of  social  life,  as 
their  contests  one  with  another  degenerated  into  a  chaos 
of  anarchy,  it  became  necessary  that  all  conceivable  means 
should  be  employed,  —  if  need  be,  through  "  blood  and 
iron," — -to  erect  territorial  and  national  states.  Enlightened 
princely  despotism  was  the  representative  and  leader  of  this 
great  progressive  movement ;  a  movement  which  was  des- 
tined to  annihilate  the  freedom  of  the  Estates  and  corpora- 
tions,^ to  establish  freedom  of  trade  and  great  markets  at 
iiome,  and  to  combine  all  the  resources  of  the  country, 
economic  as  well  as  financial  and  military,  in  face  of  the 
foreigner.  Those  states  most  quickly  became  powerful  and 
rich,  which  carried  out  this  centralising  tendency  with  the 

1  [In  the  sense  in  which  Adam  Smith  uses  this  term ;  Wealth  of  Nations  ^ 
bk.  i.,  ch.  X.,  pt.  2.] 

G  81 


82 


THE  MERCANTILE  SYSTEM. 


greatest  energy.  Germany  remained  so  far  behind  the  i 
greater  ItaHan  states,  behind  Burgundy,  Holland,  England, 
and  France,  behind  even  the  smaller  northern  states,  because 
it  remained  fast  bound  by  mediaeval  forms ;  because,  more- 
over, even  its  greater  territories  were  too  small,  too  frag- 
mentary, too  far  from  the  coast,  to  pursue  this  new  kind  of 
centralising  poUcy  like  the  western  states  of  Europe.  The 
Great  Elector  made  a  beginning ;  he  tried  to  create  a  Ger- 
man-Baltic coast  state  and  a  naval  power,  and  thereby  to 
seize  the  Dominium  Maris  Baltici,  and  the  commercial 
control  of  the  east  of  Europe.  The  attempt  was  bound  to 
fail,  because  Holland,  Sweden,  Denmark,  Poland,  Austria, 
and  Russia  had  interests  opposed  to  it,  and  because  the 
position  and  extent  of  the  Brandenburg  state,  as  it  then 
existed,  were  inadequate  for  the  task.  Abandoning,  as  it 
must,  the  main  feature  of  its  plan,  the  attempt  to  secure 
maritime  power,  only  one  way  remained  open  by  which 
the  young  mihtary  and  Protestant  state  could  arrive  at 
its  economic  ends.  And  this  was  to  endeavour,  upon  the 
agrarian  and  feudal  foundation  furnished  by  the  provinces 
grouped  around  Brandenburg,  to  create  an  industry  which 
should  rival  the  civilised  states  of  the  west,  using  for 
that  purpose  all  the  devices  of  state-aided  immigration, 
of  encouragement  of  industry,  and  of  protective  tariffs. 
Such  an  industry  would  have  alike  the  power  and  the  duty 
to  control  the  domestic  market,  to  raise  the  decaying 
handicrafts  of  the  little  rural  towns,  to  free  the  country/ 
bit  by  bit  from  dependence  on  west-European  trade  an;^ 
credit,  and  to  strengthen  its  influence  on  Poland  and  the' 
other  eastern  states. 


APPENDIX  I. 


83 


On  this  path,  then,  Frederick  William  I.  and  his  ministers 
entered  with  conscious  purpose  and  energy ;  and  out  of  this 
school  came  Frederick  II.,  who  pursued  the  same  object 
with  greater  boldness  and  genius.  To  the  question  how  it 
was  that  Frederick  regarded  the  silk  industry  as  occupying 
so  very  important,  if  not  the  most  important,  place  in  such 
a  policy,  Dr.  Hintze  gives  a  simple  and  conclusive  answer.^ 

Starting  with  the  generally  recognised  fact  that,  before 
our  modern  age  of  iron  and  coal,  the  centre  and  summit  of 
industrial  development  were  to  be  found  in  the  finer  textile 
manufactures.  Dr.  Hintze  shews  us  how  economic  suprem- 
acy passed  from  Byzantium  to  Italy,  from  Venice,  Genoa, 
Florence,  and  Lucca  to  the  greater  Italian  states,  Milan  and 
Piedmont,  from  Italy  to  Spain  and  France,  and  thence  to 
Holland  and  England  ;  and  how  this  transference  was  always 
accompanied,  partly  as  effect,  partly  as  cause,  by  the  rise  of 
the  silk  industry  by  the  side  of  the  woollen  industry.  In  no 
case  was  the  production  of  raw  silk  itself  the  cause  of  the  silk 
industry,  as  is  sometimes  supposed ;  the  actual  production 
of  silk  took  place  elsewhere  ;  and  even  in  Italy  and  France 
it  was  a  consequence  of  the  silk  industry,  and  came  com- 
paratively late.  France  and  England  had  created  their  silk 
industries  with  all  the  poUtical  resources  at  their  disposal 
and  with  the  greatest  sacrifices.  In  Lyons  in  1667  there 
were  counted  2000  looms,  in  1752,  9404.    In  the  great 


1  [Dr.  O.  Hintze  is  the  author  of  the  3rd  volume  of  Die  preussische\  Sei- 
denindustrie,  pubUshed  (through  Parey,  Berlin)  by  the  Royal  Academy  of 
Sciences,  1892,  as  the  first  instalment  of  Acta  Borussica :  Denhnaler  der 
Preussischen  Staatsverwaltung  im  i8.  Jahrhundert,  In  this  volume  of  Dr. 
Hintze's  is  given  a  "  Darstellung,"  or  narrative,  based  upon  the  documents 
in  the  first  two  volumes.] 


84 


THE  MERCANTILE  SYSTEM. 


economic  struggle  of  England  against  France,  the  prohibition 
in  1688  of  the  importation  of  French  silk  wares  into  Eng- 
land was,  perhaps,  after  the  Navigation  Laws  and  the  victories 
at  sea,  the  most  telling  blow.  Up  to  that  time  silk  goods  to 
the  value  of  500,000  had  every  year  gone  from  France  to 
England;  in  1763  the  English  silk  industry  gave  employ- 
ment to  50,000  persons.^  But  not  only  the  great  states,  the 
smaller  ones  also,  desired  at  any  price  to  have  a  silk  manu- 
facture of  their  own.  The  Italian  traders  who  first  brought 
the  silk  wares  were  followed  by  Italian  weavers  and  dyers. 
Zurich  and  Basel,  Ulm,  Augsburg,  and  Nuremberg,  had  a 
good  many  silk-workmen  as  early  as  the  sixteenth  century. 
In  Antwerp  in  the  seventeenth  century  2000  looms  were 
at  work.  In  the  Netherlands,  Amsterdam,  Haarlem,  and 
Utrecht  became  rich  through  this  industry ;  and  from  thence 
it  passed  to  Hamburg.  Belgian  and  French  refugees  joined 
the  Italian  workmen  in  bringing  it  to  Denmark,  Sweden, 
and  Russia.  About  1 700  Leipzig  had  already  a  consider- 
able velvet  and  silk  business;  in  1750  a  thousand  looms 
were  at  work.  In  the  Palatinate,  in  Munich,  and  in  Vienna, 
J.  Joachim  Becher^  had  made  various  attempts  to  call  a 
silk  industry  into  existence  by  means  of  companies ;  all 
through  the  eighteenth  century  like  attempts  were  made  in 

1  [Adam  Smith  remarked  in  1776  that  "  the  silk,  perhaps,  is  the  manu- 
facture which  would  suffer  the  most  by  freedom  of  trade,"  Wealth  of 
Nations,  bk.  iv.,  ch.  ii.  For  the  results  of  the  withdrawal  of  protection  see 
the  account  of  the  silk  manufacture  in  C.  Booth's  Labour  and  Life  of  the 
People,  vol.  i.] 

2  [An  account  of  John  Joachim  Becher  (1625-1685),  a  universal  genius 
and  somewhat  of  a  charlatan,  is  given  in  Roscher's  Geschichte  der  National- 
okonomik,  p.  270 ;  on  which  is  based  the  notice  in  Palgrave,  Dictionary  of 
Political  Economy ^  vol.  i.] 


APPENDIX  I. 


85 


every  German  capital.  But  they  succeeded,  on  any  con- 
siderable scale,  only  in  Prussia,  and  there  especially  in 
Berlin.  It  can  certainly  be  maintained  that,  though  Ham- 
burg and  Leipzig,  Krefeld  and  Utrecht  had  greater  faciUties 
in  reaching  a  market,  in  all  other  respects  Berlin  was  as 
well  fitted  as  many  other  places  to  support  a  flourishing 
silk  industry;  and  also  that,  according  to  the  ideas  of 
the  eighteenth  century,  it  was  bound  to  make  the  attempt 
as  soon  as  the  provinces  of  Brandenburg  and  Prussia  were 
conceived  of  as  forming  an  independent  economic  body 
ready  for  rivalry  with  Holland  and  England  and  France. 

[Then  follows  an  account  of  the  measures  of  the  govern- 
ment, and  of  the  organisation  and  progress  of  the  manu- 
facture.] 

We  have  watched  the  foundation,  upon  a  stubborn  soil,  of 
an  industry  which  reached  at  last  a  high  degree  of  technical 
excellence ;  and  this  by  the  use  of  all  the  measures  that  a 
consistent  mercantile  policy  could  prompt.  In  scarcely  any 
other  case  have  like  measures  been  appHed  with  so  wide  a 
sweep  and  such  steady  persistency.  In  scarcely  any  other 
case  have  they  been  so  carefully,  step  by  step,  adapted 
to  the  concrete  conditions.  What  we  have  had  under 
our  consideration  has  been  a  domestic  industry,  which 
had  already  partially  gone  over  to  the  factory  form,  but 
yet  in  which  the  workpeople  were  protected  by  gild 
regulation,  state  control,  and  governmental  inspection. 
We  have  had  to  do  with  an  industry  producing  for  a 
great  inter-state  and  foreign  market,  and   with  under- 


86 


THE  MERCANTILE  SYSTEM. 


takers  ^  ( Unternehmer)  and  factors  ^  (  Verleger)  occupying 
the  most  difficult  position  conceivable.  In  spite  of  all 
the  state  support  and  protection  they  received,  they  had 
to  contend  with  a  stern  competition,  with  the  shifting 
chances  of  the  market,  and  with  a  task,  both  in  the 
matter  of  manufacture  and  in  the  matter  of  trade,  of  the 
utmost  severity. 

The  attempt  on  the  whole  succeeded.  Berlin  in  1 780- 
1806  stood  almost  on  a  level  with  all  the  other  places  where . 
the  silk  industry  was  carried  on.  It  was  mainly  through 
the  silk  industry  that  Berlin  became  an  important  factory 
town,  and  the  town  whose  inhabitants  were  distinguished  by 
the  best  taste  in  Germany.  Of  course  people  in  Berlin 
could  not  yet  produce  quite  so  cheaply  as  the  manufact- 
ures of  Lyons  which  were  three  centuries  older;  in  many 

1  [This  term  was  used  precisely  in  the  sense  of  the  German  Unternehmer 
by  Adam  Smith  (  Wealth  of  Nations,  bk.  ii.,  ch.  ii.  —  though  the  later  special- 
ised sense  occurs  in  bk.  ii.,  ch.  i).  It  was  employed  rarely  and  with  anxiety 
as  "  not  familiar  to  an  English  ear  in  this  sense  "  by  J.  S.  Mill  {Principles  of 
Political  Economy,  bk.  ii.,  ch.  xv.,  Jin);  abandoned  by  President  Francis 
A.  Walker  (  The  Wages  Question,  p.  244)  as  "  an  impossible  term  in  political 
economy;"  and  for  some  time  replaced  in  economic  writings,  following 
Mr.  Walker's  example,  by  entrepreneur.  It  has  recently  been  recalled  to 
scientific  use,  among  others  by  Mr.  W.  Smart  (in  his  translation  of  Bohm- 
Bawerk,  Capital  and  Interest,  1890),  and  Professor  Alfred  Marshall  {Princi- 
ples of  Economics,  1890,  bk.  i.,  ch.  iii.)  as  being,  in  Mr.  Marshall's  words, 
"  the  best  to  indicate  those  who  take  the  risks  and  the  management  of  busi- 
ness as  their  share  in  the  work  of  organised  industry."] 

2  ["  Verleger  comes  from  Verlag=Vorlage,  Verschuss  {y\\ex2ii\y  someiKm^ 
shot- for  ward,  i.e.  advanced).  The  Verleger  sometimes  advances  to  the  small 
producers  merely  the  price  of  their  products ;  sometimes  he  hands  over  to 
them  the  raw  material  and  pays  piece-wages ;  sometimes  even  the  chief  tool 
or  machine  belongs  to  him,  as  e.g.  the  loom  ;  "  K.  Biicher,  Die  Entstehung 
der  Volkswirthschaft  (1893)  P-  ^06.  For  this  there  is  no  current  term  in  the 
English  of  to-day.  Factor  was  very  generally  used  in  the  eighteenth  century 


APPENDIX  /. 


87 


of  the  finer  wares  they  were  behind  Krefeld,  Switzerland 
and  Holland ;  but  they  had  caught  up  with  Hamburg  and 
Saxony.  They  had  not  yet  got  so  far  in  1806  as  to  be 
able  to  meet  with  unconcern  the  fluctuations  produced  by 
the  great  war  —  a  period  of  long  and  terrible  impoverish- 
ment, together  with  the  sudden  abohtion  of  the  gild  system, 
of  the  old  regulations  and  of  all  state  support,  as  well  as 
the  removal  of  the  prohibition  of  importation.  But  since,  in 
the  province  of  Brandenburg,  1503  looms  were  again  at 
work  in  1831,  and  as  many  as  3000  in  1 840-1 860,  it  is 
clear,  after  all,  that  most  of  the  business  concerns  that  had 
taken  root  before  1806  were  able  to  maintain  themselves 
for  at  least  a  couple  of  generations  even  in  the  current  of 
free  international  competition.  And  the  fact  that  in  the 
sixties  and  seventies,  as  living  became  dearer  in  Berlin,  and 
the  competition  of  Krefeld  and  of  foreign  countries  became 
more  intense,  most  of  the  Berlin  men  of  business,  capitalists 
and  workmen,  turned  to  other  occupations,  —  while  some 
parts  of  the  old  industry,  hke  the  business  of  dyeing, 
maintained  themselves  in  an  even  more  flourishing  state, 
—  this  fact  is  no  proof  that  the  BerHn  silk  industry  of  the 
eighteenth  century  was  not  in  its  place. 

The  task  set  before  the  men  of  that  time  was  to  secure  for 
the  real  centre  of  the  Prussian  state  a  share  in  the  industries, 
and  in  the  forms  of  industry,  that  constituted  the  essen- 
tial features  of  the  higher  civilisation  of  western  Europe. 

in  this  sense;  but  each  industry  had  its  own  particular  word  for  men  in  this 
position,  as  e.g,  the  clothiers  of  the  woollen  manufacture  of  the  west  of 
England.  Ptitfer-out  {i.e.  of  looms),  which  was  used  in  the  hosiery  trade 
of  Nottingham,  is  perhaps  the  most  exact  equivalent  of  Verleger.] 


88 


THE  MERCANTILE  SYSTEM. 


The  prosperity  of  the  silk  manufacture  in  a  distant  and  iso- 
lated fragment  of  the  state,  close  to  the  Dutch  frontier, 
namely  Krefeld,  could  not  make  up  for  its  absence  in  the 
east.  Again  and  again  did  Frederick  the  Great  endeavour 
to  induce  the  von  der  Leyen  brothers  to  move  eastward 
with  a  part  of  their  business ;  but  all  in  vain.  And  so  he 
had  to  make  an  effort  to  reach  the  same  end  in  another 
way.  In  the  course  of  his  reign  he  spent  some  two  million 
thalers  over  the  silk  industry,  more  indeed  than  for  any 
other  branch  of  manufacture.  And  what  did  he  obtain 
therewith?  That  he  had  an  industry  which  every  year  pro- 
duced wares  worth  two  million  thalers  or  more,  says  the  mer- 
cantilist; —  no!  that  he  created  an  industry  which  in  the 
nineteenth  century  disappeared,  says  the  free-trader.  I  say, 
the  two  milHon  thalers  are  to  be  looked  upon  as  an  expen- 
diture for  schooling,  as  money  spent  on  education,  which 
engrafted  on  Berlin  and  the  eastern  provinces  those  powers- 
and  aptitudes,  those  manners  and  customs,  without  which 
an  industrial  state  cannot  endure.  In  these  feudal  terri- 
tories with  their  impoverished  country  towns  and  craftsmen, 
both  the  undertakers  and  the  workmen  were  altogether  want- 
ing who  were  indispensable  for  the  finer  manufactures  aim- 
ing at  the  world- market.  The  introduction  of  foreigners 
and  the  laborious  training  of  natives  could  be  the  work 
only  of  a  poUtical  art  which  realised  both  its  object  and 
its  materials.  It  is  significant  that  at  first  we  are  met  by 
Frenchmen  and  Jews  among  the  factors,  and  by  foreigners, 
chiefly  Lyonese  and  ItaHans,  among  the  workpeople ;  while 
in  1800,  natives  prevail  in  both  classes.  It  might  with  truth 
be  said,  that  by  their  services  to  the  silk  industry  the  French 


APPENDIX  I, 


89 


and  the  Jews  repaid  the  Prussian  state  for  its  magnanimous 
toleration.  It  was  in  this  way  that  the  best  Jewish  famihes 
of  BerHn,  the  Mendelssohns  and  Friedlanders,  the  Veits  and 
the  Marcuses,  gained  their  reputation  and  social  position, 
and  at  the  same  time  turned  the  purely  mercantile  Hebrew 
body  into  an  industrial  one  :  they  themselves  changed  in 
character  in  the  process,  and  grew  side  by  side  with  the 
state  and  society.  Most  important  of  all,  Berhn  in  iSoo 
had  a  working  class  of  great  technical  skill,  and  a  body  of 
business  men  possessed  of  capital  and  ability  ;  and  this  fact 
remained  the  great  result  of  the  policy  of  Frederick,  whether 
or  no  the  silk  industry  survived. 

And  it  was  not  the  least  merit  of  that  policy  that  it  con- 
stantly, and  with  clear  understanding,  laboured  towards  a 
double  end  :  to  create  a  flourishing  industry  by  state  initia- 
tive and  poHtical  means,  and  then,  as  quickly  and  as  com- 
pletely as  possible,  to  set  it  on  its  own  feet,  and  create 
thriving  private  businesses,  —  and  so  render  itself  super- 
fluous. Similarly,  in  a  place  hke  Krefeld,  where  the  favour- 
ing conditions  afforded  by  the  neighbourhood  of  the  Dutch 
created  a  considerable  industry  without  protective  tariff 
or  subsidy  or  regulation,  the  king  did  not  think  of  state 
intervention  :  the  most  he  did  was  to  support  the  practical 
monopoly  of  the  von  der  Leyen  brothers,  because  he  saw 
that  this  great  house  was  capable  of  elevating  and  guiding 
the  whole  industry  in  an  exemplary  fashion.  Moreover,  his 
administrative  wisdom,  running  not  along  the  lines  of  rigid 
schemes,  but  in  accordance  with  the  men  and  circumstances 
before  him,  shewed  itself  precisely  in  this  contemporary 
application  of  such  divergent  systems  of  industrial  policy ; 


90 


THE  MERCANTILE  SYSTEM. 


in  Berlin  the  most  extreme  state  control  and  in  Krefeld 
complete  laissez-faire. 

The  truth  is,  he  himself,  in  his  innermost  nature,  was  just 
as  much  the  philosophical  disciple  of  the  individualistic 
enlightenment  {Auf kid  rung)  of  the  period  as  the  last  great 
representative  of  princely  absolutism.  Under  him  the  Prus- 
sian state  was  based  as  much  on  legal  security  and  on  free- 
dom of  thought  and  individual  opinion  as  upon  discipline, 
obedience,  and  subordination.  Had  he  not  combined  these 
rare  qualities  in  himself,  he  had  not  been  the  great  king, 
and  on  his  death  the  Swabian  peasant  would  not  have  asked 
the  naive  question  ^^Then,  who  is  to  govern  the  world?" 

The  yelping  curs,  the  men  astride  of  principles,  who  did 
not  understand  him  when  he  died,  understand  him  and  his 
policy  no  better  now.  They  will  still  less  understand  the 
great  problem  of  the  creation  of  states  and  national  econ- 
omies. It  lies  in  this  :  that  as  civiHsation  advances,  the 
state  and  the  national  economy  diverge  more  and  more 
the  one  from  the  other,  each  a  separate  circle  with  its  own 
organs ;  and  yet  that  this  separation  must  again  constantly 
make  way  for  a  unifying  guidance,  a  growing  interaction,  a 
harmonious  joint-movement.  And  the  secret  of  great  times 
and  great  men  consists  in  their  taking  account  of  this  two- 
fold development ;  in  their  leaving  individuals  to  form  them- 
selves, in  their  allowing  free  play  to  individual  life  in  its 
various  shapes,  and  yet  in  their  being  able  to  bring  the 
newly  emerging  as  well  as  the  old  forces  into  the  service  of 
the  whole.  As  states  get  larger,  as  social  relations  become 
more  compHcated,  it  will  be  increasingly  difficult  to  reach 
this  ideal :  —  that  economic  forces,  while  living  for  them- 


v.*  1 


,\WEtINlVER, 


University  of  California  Library 
Los  Angeles 

This  book  is  DUE  on  the  last  date  stamped  below. 


le  Return  to  GRS 


\Q% 


"■•-'10 


"A 


%WAWfimv      ^fA8va3n#  >&Aavaaii-# 


•I 

CO 


so 

%a3AiNiim'^^ 


^OF-CA1IFO%^ 


